Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
9725837 | International Review of Economics & Finance | 2005 | 21 Pages |
Abstract
We consider patent licensing under a simple model of asymmetric information, where an outsider innovator of a cost-reducing innovation interacts with a monopolist, whose cost is private information. When the innovator is endowed with combinations of fixed fee and royalty, in any optimal menu, the low-cost monopolist is always offered a pure fixed fee contract, while for the contract offered to the high-cost monopolist, the royalty rate is always positive. Moreover, there are cases where it is a pure royalty contract. This provides an explanation of royalty licensing, in particular, and the coexistence of different licensing schemes, in general.
Keywords
Related Topics
Social Sciences and Humanities
Economics, Econometrics and Finance
Economics and Econometrics
Authors
Debapriya Sen,