Technology licensing in a differentiated oligopoly

We show the effects of product differentiation and product market competition on technology licensing by an outside innovator. For a certain range of product differentiation, both the innovator and the society prefer royalty licensing compared to auction (or fixed-fee), irrespective of Cournot and B...

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Bibliographic Details
Published inInternational review of economics & finance Vol. 29; pp. 455 - 465
Main Authors Bagchi, Aniruddha, Mukherjee, Arijit
Format Journal Article
LanguageEnglish
Published Greenwich Elsevier Inc 01.01.2014
Elsevier Science Ltd
Subjects
Antitrust
Auction
Competition
Information technology
Licenses
Licensing
Product differentiation
Royalties
Royalty
Studies
D43
Royalty
Licensing
Auction
Product differentiation
L13
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Summary:We show the effects of product differentiation and product market competition on technology licensing by an outside innovator. For a certain range of product differentiation, both the innovator and the society prefer royalty licensing compared to auction (or fixed-fee), irrespective of Cournot and Bertrand competitions, if the number of potential licensees is sufficiently large. Hence, for such a range of product differentiation, neither the innovator nor the antitrust authority requires information about the type of product market competition in choosing the type of the licensing contract. •We consider technology licensing in an industry with differentiated products.•Licenser and the society may prefer royalty licensing than auction or fixed-fee.•This occurs under both Cournot and Bertrand competitions.•The type of competition may not affect the choice of the licensing contract.
ISSN:1059-0560
1873-8036
DOI:10.1016/j.iref.2013.07.005