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Technology Transfer In A Stackelberg Structure: Licensing Contracts And Welfare

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  • TARUN KABIRAJ

Abstract

We study the question of optimal licensing contracts in a leadership structure and discuss the welfare implications. We assume that the size of the innovation is exogenous and the patent holder is a competitor in the product market. Then welfare depends on the types of contracts available and on the ownership of patents. In particular, we examine whether a leader's innovation is considered to be socially more valuable than a follower's innovation. We show that there are situations when a follower's innovation generates larger welfare. Given the private incentives for innovation, a licensing policy may induce the desired firm to win the patent race.

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  • Tarun Kabiraj, 2005. "Technology Transfer In A Stackelberg Structure: Licensing Contracts And Welfare," Manchester School, University of Manchester, vol. 73(1), pages 1-28, January.
    • Handle: RePEc:bla:manchs:v:73:y:2005:i:1:p:1-28
    DOI: 10.1111/j.1467-9957.2005.00421.x
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    1. van Damme, Eric & Hurkens, Sjaak, 1999. "Endogenous Stackelberg Leadership," Games and Economic Behavior, Elsevier, vol. 28(1), pages 105-129, July.
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    8. Tarun Kabiraj, 2004. "Patent Licensing in a Leadership Structure," Manchester School, University of Manchester, vol. 72(2), pages 188-205, March.
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