 Cross-border technology licensing with R&D Opportunity and Government InterventionJota Ishikawa and Toshihiro Okubo Journal of the Japanese and International Economies, 2025, vol. 76, issue C Abstract: Technology holders may have strategic incentive to offer licensing contracts that deter (potential) rivals from conducting their own R&D. This study develops a simple model of technology licensing from a foreign firm to a home firm, in which R&D serves as an alternative means for the home firm to enter the market. We first derive the optimal licensing fees with differentiated goods and two-part tariffs. Depending on parameter values, three types of licensing contracts can emerge: (i) by means of a fixed fee alone, (ii) by means of a royalty alone, and (iii) by means of a combination of a fixed fee and a royalty. We then specifically investigate intervention by the home government: withholding taxes on royalties and R&D subsidies. A withholding tax may improve home welfare without imposing any burden on the home firm and consumers. Committing itself to an R&D subsidy, the home government can reduce licensing fees without any cost. Keywords: International oligopoly; Licensing; Withholding tax; R&D subsidy; Rent-shifting (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:jjieco:v:76:y:2025:i:c:s0889158325000139 DOI: 10.1016/j.jjie.2025.101364 Access Statistics for this article Journal of the Japanese and International Economies is currently edited by Takeo Hoshi More articles in Journal of the Japanese and International Economies from Elsevier |
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