Licensing of a lower-cost production process to an asymmetric Cournot duopoly

Dimitry Rtischev

Gakushuin Economic Papers, 2009, vol. 45, issue 4, 325-336

Abstract: An outside inventor of a new production process seeks to license it to Cournot duopolists which have unequal ex ante costs. Distinguishing “leading-edge” innovations (new cost below both firms’ costs) from “catch-up” innovations (new cost between the two firms’ costs), we compare the equilibria of two license-selling mechanisms: exclusive license auction and non-exclusive price-setting. In contrast to the often-studied case of an innovation that reduces the cost of any licensee by the same amount, we show that licensing of a new process may attenuate the ex ante cost asymmetry, allow the inefficient firm to leapfrog its competitor, and raise the licensee’s net profits.

Keywords: cost-reducing innovation; technology licensing (search for similar items in EconPapers)
JEL-codes: D45 L24 O31 (search for similar items in EconPapers)
Date: 2009
References: Add references at CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://www.gakushuin.ac.jp/univ/eco/gakkai/pdf_fil ... hev/4504rtischev.pdf

Related works:
Working Paper: Licensing of a lower-cost production process to an asymmetric Cournot duopoly (2009)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:abc:gakuep:45-4-4

Access Statistics for this article

More articles in Gakushuin Economic Papers from Gakushuin University, Faculty of Economics 1-5-1 Mejiro, Toshima-ku, Tokyo 171-8588 Japan. Contact information at EDIRC.
Bibliographic data for series maintained by administrator ().