Profit Improving via Strategic Technology Sharing

Kuo-Feng Kao and Cheng-Hau Peng ()

The B.E. Journal of Economic Analysis & Policy, 2016, vol. 16, issue 3, 1321-1336

Abstract: This paper investigates whether a downstream monopolist has an incentive to freely share its technology to potential entrants. With a linear demand, it is more profitable for the downstream monopolist to share its obsolete technology with the potential entrants even with no returns. In this context, technology sharing is a Pareto improvement. Moreover, the profit of the downstream monopolist via technology sharing increases with the number of new entrants, but the nexus between social welfare and the number of new entrants is non-monotonic.

Keywords: strategic technology sharing; successive monopoly; vertically-related markets; welfare (search for similar items in EconPapers)
JEL-codes: L12 L24 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (3)

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DOI: 10.1515/bejeap-2015-0202

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