Licensing a new product with non-linear contracts

Can Erutku and Yves Richelle

Canadian Journal of Economics, 2006, vol. 39, issue 3, 932-947

Abstract: This paper looks at a situation where a licensor owns a patent on a technology that allows the production of a new good. The licensor seeks to license its innovation to a set of producers that differ according to their marginal cost of producing an existing good. We show that the licensor is able to obtain the profit a monopolist would achieve by producing the new good. The equilibrium licensing contract specifies both a fixed fee and a royalty scheme based on the production of a licensee.

JEL-codes: D45 (search for similar items in EconPapers)
Date: 2006
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Citations: View citations in EconPapers (3)

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