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Farsighted stability in patent licensing: An abstract game approach

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  • Hirai, Toshiyuki
  • Watanabe, Naoki
  • Muto, Shigeo

Abstract

This paper analyzes the negotiations made by an external patent holder and potential licensee firms in a new model of patent licensing, assuming that they are all farsighted, and characterizes the symmetric farsighted stable sets. Given a net profit of each licensee firm, a set of outcomes is a symmetric farsighted stable set if and only if, at any outcome in the set, each licensee firm receives the net profit and the number of licensee firms maximizes the patent holder's profit provided that licensee firms obtain the net profits. We also show the close relationship between the symmetric farsighted stable sets and the relative interior of the core. Further, we confirm that the symmetric farsighted stable sets are the absolutely maximal farsighted stable sets (Ray and Vohra, forthcoming) as well as the history dependent strongly rational expectation farsighted stable sets (Dutta and Vartiainen, forthcoming).

Suggested Citation

  • Hirai, Toshiyuki & Watanabe, Naoki & Muto, Shigeo, 2019. "Farsighted stability in patent licensing: An abstract game approach," Games and Economic Behavior, Elsevier, vol. 118(C), pages 141-160.
    • Handle: RePEc:eee:gamebe:v:118:y:2019:i:c:p:141-160
    DOI: 10.1016/j.geb.2019.08.012
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    References listed on IDEAS

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    Cited by:

    1. Kimya, Mert, 2020. "Farsighted Objections and Maximality in One-to-one Matching Problems," Working Papers 2020-14, University of Sydney, School of Economics.
    2. Núñez, Marina & Vidal-Puga, Juan, 2022. "Stable cores in information graph games," Games and Economic Behavior, Elsevier, vol. 132(C), pages 353-367.
    3. Kimya, Mert, 2020. "Farsighted Objections and Maximality in One-to-one Matching Problems," Working Papers 202014, University of Sydney, School of Economics, revised Jul 2021.
    4. Mert Kimya, 2024. "Axiomatic Approach to Farsighted Coalition Formation," Working Papers 2024-03, University of Sydney, School of Economics.
    5. Nakada, Satoshi & Shirakawa, Ryo, 2023. "On the core of a patent licensing game," Economics Letters, Elsevier, vol. 233(C).
    6. Kimya, Mert, 2022. "Farsighted objections and maximality in one-to-one matching problems," Journal of Economic Theory, Elsevier, vol. 204(C).

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    More about this item

    Keywords

    Farsighted stable set; Patent licensing; Abstract game; Maximality;
    All these keywords.

    JEL classification:

    • C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
    • D45 - Microeconomics - - Market Structure, Pricing, and Design - - - Rationing; Licensing

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