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Technology licensing with strategic tax policy

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  • Arijit Mukherjee
  • Yingyi Tsai

Abstract

Despite the important insights it has provided, technology licensing literature remains restrictive by not allowing government policies. We show that in the presence of strategic tax policies, an outside innovator and, more interestingly and in contrast to the existing works, the consumers are better off under royalty licensing compared to auction (or fixed-fee licensing) if the number of potential licensees is sufficiently large. It follows from our analysis that a combination of fixed-fee and output royalty can be preferable to the innovator compared to both royalty licensing and auction (or fixed-fee licensing).

Suggested Citation

  • Arijit Mukherjee & Yingyi Tsai, 2010. "Technology licensing with strategic tax policy," Discussion Papers 10/09, University of Nottingham, School of Economics.
    • Handle: RePEc:not:notecp:10/09
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    File URL: https://www.nottingham.ac.uk/economics/documents/discussion-papers/10-09.pdf
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    References listed on IDEAS

    as
    1. Fauli-Oller, Ramon & Sandonis, Joel, 2002. "Welfare reducing licensing," Games and Economic Behavior, Elsevier, vol. 41(2), pages 192-205, November.
    2. Macho-Stadler, Ines & Martinez-Giralt, Xavier & David Perez-Castrillo, J., 1996. "The role of information in licensing contract design," Research Policy, Elsevier, vol. 25(1), pages 43-57, January.
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    Cited by:

    1. Seung-Leul Kim & Sang-Ho Lee, 2014. "Eco-Technology Licensing under Emission Tax: Royalty vs. Fixed-Fee," Korean Economic Review, Korean Economic Association, vol. 30, pages 273-300.
    2. Ismail Saglam, 2023. "Licensing cost‐reducing innovations under supply function competition," Bulletin of Economic Research, Wiley Blackwell, vol. 75(1), pages 180-201, January.

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    More about this item

    Keywords

    Licensing; Tax; Auction; Royalty;
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