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Technology Transfer, Licensing Contracts, and Incentives for Further Innovation

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  • Bruce A. Larson
  • Margot Anderson

Abstract

Technology licensing is common in agricultural and natural resource sectors. An important characteristic of technology licenses is that they provide incentives for further innovation on the part of the buyer. This paper develops a risk-sharing model to analyze how risk preferences and expectations about further innovation possibilities alter technology payments and the incentives for complementary local innovation. Higher buyer risk aversion, which is associated with lower fixed payments, reduces the technology buyer's level of innovation. Sellers are generally better off when innovation is anticipated, but buyers are generally better off when innovation is unanticipated, although less innovation may be realized.

Suggested Citation

  • Bruce A. Larson & Margot Anderson, 1994. "Technology Transfer, Licensing Contracts, and Incentives for Further Innovation," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 76(3), pages 547-556.
    • Handle: RePEc:oup:ajagec:v:76:y:1994:i:3:p:547-556.
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    File URL: http://hdl.handle.net/10.2307/1243665
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    Cited by:

    1. Ka Wai Terence Fung & Chi Keung Marco Lau & Kwok Ho Chan, 2016. "An R&D-based real business cycle model," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 63(4), pages 327-358, December.
    2. Lee Davis, 2006. "Licensing Strategies of the Enterprising - but Vulnerable - "Intellectual Property" Vendors," DRUID Working Papers 06-12, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.

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