Licensing a product innovation from an external innovator to a Stackelberg duopoly

Manel Antelo and Lluis Bru

MPRA Paper from University Library of Munich, Germany

Abstract: We study the licensing of a product innovation from an external innovator in a duopoly of firms that compete sequentially with each other through quantities or prices. We find that the innovation is only licensed to a single firm, regardless of market competition. However, both the licensee and contractual terms under quantity competition differ from those under price competition. In the first case, the innovation is licensed to the market-leading firm through a non-distorting contract, and in the second case, to the market-following firm by means of a two-part tariff (distorting) contract involving a per-unit royalty.

Keywords: Product innovation; licensing; Stackelberg duopoly; quantity competition; price competition (search for similar items in EconPapers)
JEL-codes: D43 D45 (search for similar items in EconPapers)
Date: 2023
New Economics Papers: this item is included in nep-bec, nep-com, nep-cta, nep-gth, nep-ind, nep-ipr, nep-mfd, nep-mic and nep-sbm
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:117542

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