IDEAS home Printed from https://ideas.repec.org/a/ebl/ecbull/eb-07l10035.html
   My bibliography  Save this article

On the Optimality of Patent Licensing with Maximum Production Volume

Author

Listed:
  • Marco Alderighi

    (Università della Valle d'Aosta)

Abstract

This paper compares alternative licensing schemes of a patentor, that is, at the same time, a producer within an industry. The licensing scheme can assume the form of a royalty per unit of output, a fixed fee, or a fixed fee with maximum authorized production. We show that, when the innovation is non-drastic, in a duopolistic Cournot competition, the third method dominates the others. As the patentor has strong incentives to limit the output of the opponent, this practice must be carefully monitored by the antitrust authority.

Suggested Citation

  • Marco Alderighi, 2008. "On the Optimality of Patent Licensing with Maximum Production Volume," Economics Bulletin, AccessEcon, vol. 12(5), pages 1-7.
    • Handle: RePEc:ebl:ecbull:eb-07l10035
    as

    Download full text from publisher

    File URL: http://www.accessecon.com/pubs/EB/2008/Volume12/EB-07L10035A.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Kamien, Morton I. & Oren, Shmuel S. & Tauman, Yair, 1992. "Optimal licensing of cost-reducing innovation," Journal of Mathematical Economics, Elsevier, vol. 21(5), pages 483-508.
    2. Morton I. Kamien & Yair Tauman, 1986. "Fees Versus Royalties and the Private Value of a Patent," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 101(3), pages 471-491.
    3. Kamien,Morton I. & Schwartz,Nancy L., 1982. "Market Structure and Innovation," Cambridge Books, Cambridge University Press, number 9780521293853, December.
    4. Fershtman, Chaim & Kamien, Morton I., 1992. "Cross licensing of complementary technologies," International Journal of Industrial Organization, Elsevier, vol. 10(3), pages 329-348, September.
    5. Morton I. Kamien & Yair Tauman, 2002. "Patent Licensing: The Inside Story," Manchester School, University of Manchester, vol. 70(1), pages 7-15, January.
    6. Christian Bessy & Eric Brousseau & Camille Chaserant & Régis Coeurderoy, 2006. "“The Diversity of Technology Licensing Agreements and their Causes“," Post-Print hal-00178705, HAL.
    7. Rockett, Katharine, 1990. "The quality of licensed technology," International Journal of Industrial Organization, Elsevier, vol. 8(4), pages 559-574, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Stefano Colombo & Luigi Filippini & Debapriya Sen, 2023. "Patent Licensing and Capacity in a Cournot Model," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 62(1), pages 45-62, February.
    2. Colombo, Stefano & Filippini, Luigi & Sen, Debapriya, 2020. "Licensing with capacity constraint," MPRA Paper 102653, University Library of Munich, Germany.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. repec:ebl:ecbull:v:12:y:2008:i:5:p:1-7 is not listed on IDEAS
    2. Saracho, Ana I., 2011. "Licensing information goods," International Journal of Industrial Organization, Elsevier, vol. 29(2), pages 187-199, March.
    3. Sen, Debapriya & Tauman, Yair, 2007. "General licensing schemes for a cost-reducing innovation," Games and Economic Behavior, Elsevier, vol. 59(1), pages 163-186, April.
    4. Mukherjee, Arijit, 2010. "Licensing a new product: Fee vs. royalty licensing with unionized labor market," Labour Economics, Elsevier, vol. 17(4), pages 735-742, August.
    5. Amir, Rabah & Encaoua, David & Lefouili, Yassine, 2014. "Optimal licensing of uncertain patents in the shadow of litigation," Games and Economic Behavior, Elsevier, vol. 88(C), pages 320-338.
    6. Bagchi, Aniruddha & Mukherjee, Arijit, 2014. "Technology licensing in a differentiated oligopoly," International Review of Economics & Finance, Elsevier, vol. 29(C), pages 455-465.
    7. Sinha, Uday Bhanu, 2016. "Optimal value of a patent in an asymmetric Cournot duopoly market," Economic Modelling, Elsevier, vol. 57(C), pages 93-105.
    8. Rabah Amir & David Encaoua & Yassine Lefouili, 2011. "Per-Unit Royalty vs Fixed Fee: The Case of Weak Patents," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00595493, HAL.
    9. Nisvan Erkal, 2005. "Optimal Licensing Policy in Differentiated Industries," The Economic Record, The Economic Society of Australia, vol. 81(252), pages 51-60, March.
    10. Sen, Debapriya, 2005. "Fee versus royalty reconsidered," Games and Economic Behavior, Elsevier, vol. 53(1), pages 141-147, October.
    11. Debapriya Sen & Giorgos Stamatopoulos, 2009. "Technology Transfer Under Returns To Scale," Manchester School, University of Manchester, vol. 77(3), pages 337-365, June.
    12. Arijit Mukherjee, 2010. "Technology licensing under convex costs," Discussion Papers 10/05, University of Nottingham, School of Economics.
    13. Ana Mauleon & Vincent Vannetelbosch & Cecilia Vergari, 2013. "Bargaining and delay in patent licensing," International Journal of Economic Theory, The International Society for Economic Theory, vol. 9(4), pages 279-302, December.
    14. repec:ebl:ecbull:v:15:y:2005:i:15:p:1-10 is not listed on IDEAS
    15. Elisabetta Ottoz, 2005. "Technological spillover and the time distribution of licenses," Economics Bulletin, AccessEcon, vol. 15(15), pages 1-10.
    16. Bruno D. Badia, 2019. "Patent Licensing and Technological Catch-Up in a Heterogeneous Duopoly," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 55(2), pages 287-300, September.
    17. Sen, Debapriya, 2005. "On the coexistence of different licensing schemes," International Review of Economics & Finance, Elsevier, vol. 14(4), pages 393-413.
    18. Gallardo, R. Karina & McCluskey, Jill J. & Rickard, Bradley J. & Akhundjanov, Sherzod B., 2016. "Assessing Innovator and Grower Profit Potential under Different New Plant Variety Commercialization Strategies," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 235940, Agricultural and Applied Economics Association.
    19. Kuang-Cheng Andy Wang & Ching-Chih Tseng & Wen-Jung Liang, 2016. "Patent Licensing in the Presence of Trade Barriers," The Japanese Economic Review, Japanese Economic Association, vol. 67(3), pages 329-347, September.
    20. Ramón Faulí-Oller & Joel Sandonís, 2007. "Patent Licensing By Means Of An Auction: Internal Vs. External Patentee," Working Papers. Serie AD 2007-09, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
    21. Madhuri H. Shastry & Uday Bhanu Sinha, 2024. "Privatization and Licensing Under Public Budget Constraint," Journal of Industry, Competition and Trade, Springer, vol. 24(1), pages 1-22, December.
    22. Changying Li & Junmei Wang, 2010. "Licensing a Vertical Product Innovation," The Economic Record, The Economic Society of Australia, vol. 86(275), pages 517-527, December.

    More about this item

    JEL classification:

    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ebl:ecbull:eb-07l10035. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: John P. Conley (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.