Brand name collaboration and optimal tariff

In a Cournot-Nash framework we study the possibility of cross-border brand name collaborations between two firms where superior brand enhances consumers' valuation for the product. We show that a firm owning a superior brand will license its name to a less reputed organization provided the licensee has already established its name to some extent. In other words, “collaborations” tend to take place between the “equals”. We extend our analysis to show how a tariff on the reputed brand product affects the conditions for collaboration. We also determine the optimal tariff rate consistent with the host country's welfare maximization.