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Decentralized licensing of complementary patents: Comparing the royalty, fixed-fee and two-part tariff regimes

Author

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  • Yann Ménière

    (CERNA i3 - Centre d'économie industrielle i3 - Mines Paris - PSL (École nationale supérieure des mines de Paris) - PSL - Université Paris Sciences et Lettres - I3 - Institut interdisciplinaire de l’innovation - CNRS - Centre National de la Recherche Scientifique)

  • Sarah Parlane

    (UCD School of Economics - UCD - University College Dublin [Dublin])

Abstract

This paper explores the decentralized licensing of complementary patents reading on a technology standard. We develop a model in which manufacturers must buy licenses from different patent owners in order to enter the market for differentiated standard-compliant products. We consider three different types of licensing, namely, the fixed-fee, per-unit royalty and two-part tariff regimes, and compare their performances in terms of licensing revenue, price, product variety and welfare. We show that each regime entails different types of coordination failures. We establish that each of them may maximize the licensing revenue depending on the number of licensors, number of potential entrants and product differentiation.

Suggested Citation

  • Yann Ménière & Sarah Parlane, 2010. "Decentralized licensing of complementary patents: Comparing the royalty, fixed-fee and two-part tariff regimes," Post-Print hal-00460754, HAL.
    • Handle: RePEc:hal:journl:hal-00460754
    DOI: 10.1016/j.infoecopol.2009.10.003
    Note: View the original document on HAL open archive server: https://minesparis-psl.hal.science/hal-00460754v1
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    References listed on IDEAS

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    Cited by:

    1. Chryssoula Pentheroudakis & Justus A. Baron, 2016. "Licensing Terms of Standard Essential Patents: A Comprehensive Analysis of Cases," JRC Research Reports JRC104068, Joint Research Centre.
    2. Miao, Chun-Hui, 2016. "Licensing a technology standard," International Journal of Industrial Organization, Elsevier, vol. 47(C), pages 33-61.
    3. Liu, Shi-Miin & Chen, Hsiao-Chi & Han, Wenqing & Lin, Yen-Hung, 2018. "Optimal concession contracts for landlord port authorities to maximize fee revenues with minimal throughput requirements," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 109(C), pages 239-260.
    4. Котляров И.Д., 2015. "Отбор Партнера По Лицензионному Соглашению," Журнал Экономика и математические методы (ЭММ), Центральный Экономико-Математический Институт (ЦЭМИ), vol. 51(2), pages 103-112, апрель.
    5. Ghafele, Roya & D. O’Brien, Robert, 2012. "Open innovation for sustainability: Lessons from the GreenXchange experience," MPRA Paper 40440, University Library of Munich, Germany.

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