Fee Versus Royalties in General Cost functions

Hiroaki Ino

No 65, Discussion Paper Series from School of Economics, Kwansei Gakuin University

Abstract: Which is better off for the patentee to license its technology by fixed fee or unit royalties? Kamien and Tauman [8] showed that the fixed fee scheme brings greater private value of the patent in the linear model. We extend their analysis into a general model. Then, the simple fact that the model allows a increasing marginal cost supports the unit royalties scheme. More concretely, the unit royalties scheme is superior to the fixed fee scheme when the number of firms is large.

Keywords: licensing; Cournot competition; convex cost; limit theorem (search for similar items in EconPapers)
JEL-codes: D45 L13 (search for similar items in EconPapers)
Pages: 21 pages
Date: 2010-11, Revised 2010-11
New Economics Papers: this item is included in nep-ipr, nep-pr~ and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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