Patent Licensing from High-Cost Firm to Low-Cost Firm

Sougata Poddar () and Uday Bhanu Sinha ()

Departmental Working Papers from National University of Singapore, Department of Economics

Abstract: In the literature of patent licensing, most of the studies are done where new technology is transferred from a cost-efficient firm (patentee) to a less efficient firm (licensee). However, R&D intensive firms are usually based in high wage countries whereas the cost-efficient firms are based in low wage countries. As a result R&D intensive firms are not necessarily the most cost -efficient firms in the industry, although in most cases they are the patentee firms. Given this backdrop, we study a situation of patent licensing where the technology transfer takes place from an innovative firm, which is relatively inefficient in terms of cost of production to its cost-efficient rival. We look for optimal licensing arrangements in this environment. This framework also provides a platform to bridge the literature on external and internal patentees.

Keywords: licensing; fixed fee; royalty; two-part tariff; quantity competition; Innovation (search for similar items in EconPapers)
JEL-codes: D43 D45 L13 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com, nep-ino and nep-mic
Date: 2005
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