Technology licensing with asymmetric absorptive capacity

Chih-Wei Chang, Yan-Shu Lin and Ming-Fang Tsai

Asia-Pacific Journal of Accounting & Economics, 2016, vol. 23, issue 3, 278-290

Abstract: This paper establishes a duopoly model to investigate the impacts of asymmetric absorptive capacity and asymmetric production cost on international technology licensing by an outside patent-holder. We find that, irrespective of fixed fee and royalty licensing, the patent-holder may adopt exclusively licensing if the difference in the absorptive capacity of two firms is large enough; otherwise, it will license to both firms. Surprisingly, such international licensing may be welfare-reducing if the difference in absorptive capacities between two licensees is large enough.

Date: 2016
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DOI: 10.1080/16081625.2016.1188452

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Asia-Pacific Journal of Accounting & Economics is currently edited by Yin-Wong Cheung, Hong Hwang, Jeong-Bon Kim, Shu-Hsing Li and Suresh Radhakrishnan

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