How does a public innovator license a foreign rival?

John Heywood, Lu Xu and Guangliang Ye

Australian Economic Papers, 2019, vol. 58, issue 1, 78-95

Abstract: This paper uniquely considers the optimal two‐part fee of a public firm innovator licensing to a more efficient foreign rival. This is both theoretically interesting and empirically relevant. While previous research emphasises the importance of fixed fees for public firms, we show that, in this case, ad valorem fees typically dominate both fixed fees and per unit royalties. This domination carries over when a private domestic competitor is also added to the market.

Date: 2019
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https://doi.org/10.1111/1467-8454.12141

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