Does an incumbent monopolist have an incentive to invite new entry through granting a free patent license?

Tsuyoshi Toshimitsu

Research in Economics, 2020, vol. 74, issue 4, 349-353

Abstract: We examine whether an incumbent monopolist has an incentive to invite a new entry. In particular, we demonstrate the condition of a profit-raising entry effect in the presence of network externalities. Here the incumbent monopolist grants a free patent license for a perfectly compatible product for a new firm when it can choose the level of compatibility.

Keywords: Profit-raising entry; Fulfilled expectation; Horizontally differentiated duopoly; Monopoly; Network externality; Compatibility (search for similar items in EconPapers)
JEL-codes: D21 D43 D62 L13 (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:eee:reecon:v:74:y:2020:i:4:p:349-353

DOI: 10.1016/j.rie.2020.10.005

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