Optimal value of a patent in an asymmetric Cournot duopoly market

Uday Sinha

Economic Modelling, 2016, vol. 57, issue C, 93-105

Abstract: We study how to transfer a patented innovation to competing firms. We consider a Cournot duopoly market with asymmetric pre-innovation costs and an independent patent holder who is not a producer in the market. There are two kinds of cost reducing innovations: “common innovation” and “new technology innovation”. We show that the best way to transfer an innovation for the patent holder is to sell the patent to the efficient firm at a fixed payment who would further license the innovation to its rival. This patent sale dominates all other methods of licensing for both kinds of innovations.

Keywords: Patent sale; Licensing; Asymmetric firms; Cost reducing innovation; Auction; Fixed fee; Royalty, two part tariff (search for similar items in EconPapers)
JEL-codes: D43 D44 D45 L13 O32 O33 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (15)

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Related works:
Working Paper: OPTIMAL VALUE OF A PATENT IN AN ASYMMETRIC COURNOT DUOPOLY MARKET (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:57:y:2016:i:c:p:93-105

DOI: 10.1016/j.econmod.2016.04.005

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