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How does a mixed ownership firm license a patent?

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  • Gelves, Juan Alejandro
  • Heywood, John S.

Abstract

This paper demonstrates that a cost disadvantaged innovator increasingly relies on licensing with a fixed fee as its public ownership share grows. Moreover, when the innovation is drastic, a cost disadvantaged innovator frequently licenses by fixed fee when it has a public share even as a fully private firm will never use a fixed fee. As the fixed fee improves welfare, these results suggest that the licensing method of a partial public firm helps correct the market failure of imperfect competition.

Suggested Citation

  • Gelves, Juan Alejandro & Heywood, John S., 2016. "How does a mixed ownership firm license a patent?," Economic Modelling, Elsevier, vol. 59(C), pages 278-284.
    • Handle: RePEc:eee:ecmode:v:59:y:2016:i:c:p:278-284
    DOI: 10.1016/j.econmod.2016.07.018
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Dongdong Li, 2021. "Optimal licensing strategy of green technology in a mixed oligopoly: Fixed fee versus royalty," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 42(4), pages 942-951, June.
    2. Leonard F. S. Wang & Arijit Mukherjee & Chenhang Zeng, 2020. "Does technology licensing matter for privatization?," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 22(5), pages 1462-1480, September.
    3. Ding, Rong & Ko, Chiu Yu, 2021. "Does licensing improve welfare with rent dissipation?," Economic Modelling, Elsevier, vol. 105(C).
    4. Ali Dadpay & Faraz Farhidi & Greg Bell & J. Alejandro Gelves, 2022. "Licensing Innovation in Mixed Multinational Markets with Stackelberg Leadership," Journal of Industry, Competition and Trade, Springer, vol. 22(3), pages 411-428, December.
    5. Jiaqi Chen & Sang-Ho Lee & Timur K. Muminov, 2021. "Welfare-reducing discriminatory output subsidies with mixed ownership and R&D," Economics Bulletin, AccessEcon, vol. 41(3), pages 1592-1602.
    6. Yang, Le & Huang, Zining, 2023. "Quality-improving licensing of an outside innovator in a mixed Cournot duopoly," Economic Modelling, Elsevier, vol. 126(C).
    7. 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.
    8. John S. Heywood & Lu Xu & Guangliang Ye, 2019. "How does a public innovator license a foreign rival?," Australian Economic Papers, Wiley Blackwell, vol. 58(1), pages 78-95, March.
    9. Junichi Haraguchi & Toshihiro Matsumura, 2020. "Implicit protectionism via state enterprises and technology transfer from foreign enterprises," Review of International Economics, Wiley Blackwell, vol. 28(3), pages 723-743, August.
    10. Yan, Qingyou & Yang, Le, 2018. "Optimal licensing schemes for a mixed ownership firm when facing uncertain R&D outcomes and technology spillover," International Review of Economics & Finance, Elsevier, vol. 58(C), pages 550-572.
    11. Chen, Xu & Peng, Ying & Wang, Xiaojun & Wang, Pengfei, 2024. "Capacity sharing between competing manufacturers: A collective good or a detrimental effect?," International Journal of Production Economics, Elsevier, vol. 268(C).
    12. Cho, Sumi & Kim, Doori & Lee, Sang-Ho, 2022. "Free licensing strategy and ex-post privatization policy with passive ownership," Economic Modelling, Elsevier, vol. 106(C).

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    More about this item

    Keywords

    Cournot; Patent licensing; Mixed duopoly; Fixed fee; Royalty;
    All these keywords.

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices

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