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Licensing policies for a new product

Author

Listed:
  • Francisco Caballero-sanz
  • Rafael Moner-colonques
  • Jose Sempere-monerris

Abstract

This paper studies licensing policies for the owner of a new product and addresses their welfare impact in the assessment of market failures. We show that the best licensing policy for the patent holder is fixed fee licensing with an exclusive territory clause. Consumers are also better off with fixed fees but do not prefer the exclusive territory clause. Social welfare is higher under exclusive territories when fixed costs are not too large. As for efficiency, the number of licences in the private market equilibrium falls short of the socially optimal solution. Our analysis discloses that (i) any policy measures aimed at enhancing the diffusion of technology, in terms of the number of licences, would be welcomed and, (ii) the permissive treatment received by licensing agreements with exclusive territories is justified.

Suggested Citation

  • Francisco Caballero-sanz & Rafael Moner-colonques & Jose Sempere-monerris, 2005. "Licensing policies for a new product," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 14(8), pages 697-713.
    • Handle: RePEc:taf:ecinnt:v:14:y:2005:i:8:p:697-713
    DOI: 10.1080/09512740500063915
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Antelo, Manel & Antonio, Sampayo, 2017. "Licensing contracts and the number of licenses under screening," MPRA Paper 77252, University Library of Munich, Germany.
    2. Manel Antelo, 2009. "On contract duration of royalty licensing contracts," Spanish Economic Review, Springer;Spanish Economic Association, vol. 11(4), pages 301-301, December.
    3. Yang, Le & Huang, Zining, 2023. "Quality-improving licensing of an outside innovator in a mixed Cournot duopoly," Economic Modelling, Elsevier, vol. 126(C).
    4. Wang, Kuang-Cheng Andy & Liang, Wen-Jung & Chou, Pin-Shu, 2013. "Patent licensing under cost asymmetry among firms," Economic Modelling, Elsevier, vol. 31(C), pages 297-307.
    5. 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.
    6. Manel Antelo & Antonio Sampayo, 2024. "Licensing of a new technology by an outside and uninformed licensor," Journal of Economics, Springer, vol. 142(2), pages 111-162, July.
    7. Zou, Yuxiang & Chen, Tai-Liang, 2020. "Quality differentiation and product innovation licensing," Economic Modelling, Elsevier, vol. 87(C), pages 372-382.
    8. Antelo, Manel & Bru, Lluís, 2023. "Licensing a product innovation from an external innovator to a Stackelberg duopoly," MPRA Paper 117542, University Library of Munich, Germany.

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