Cross‐licensing agreements in presence of technological improvements

Seyed H. Hosseini, Richard Gray and Mohammad Torshizi

Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, 2019, vol. 67, issue 1, 115-130

Abstract: This study investigates the relationship between technologies that firms expect to achieve after cross‐licensing (CL) and their incentives for signing CL agreements in a multiproduct‐firm setting. Results indicate that if markets are bounded substantial technological improvements that result in removal of firms’ current products from the market may in fact reduce firms’ incentives to negotiate a CL deal. This may also give firms an incentive to agree upon a tacit collusion by which they limit the utilization of CL technologies. However, when markets are unbounded, the prospect of capturing new markets and charging royalty fees can significantly increase firms’ incentives for CL. The rationale behind our modeling assumptions is discussed using example from agriculture biotechnology industry. Cette étude examine la relation entre les technologies pouvant être atteintes par les firmes suivant l'accord de licences réciproques, et les incitatifs pour encourager la signature de telles ententes dans le cadre de firmes multi‐productrices. Les résultats démontrent que si les marchés sont limités, les améliorations technologiques considérables qui résultent du retrait du marché de produits courants de la firme pourrait en effet réduire les incitatifs de cette dernière pour la négociation de licences réciproques. Les fondements qui sous‐tendent nos prévisions modélisées font l'objet d'une discussion au moyen d'un exemple de l'industrie agricole biotechnologique.

Date: 2019
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Persistent link: https://EconPapers.repec.org/RePEc:bla:canjag:v:67:y:2019:i:1:p:115-130

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