 Optimal licensing in a differentiated Bertrand market under uncertain R&D outcomes and technology spilloverQingyou Yan and Le Yang Economic Modelling, 2018, vol. 68, issue C, 117-126 Abstract: This paper studies the licensing behavior in a differentiated Bertrand duopoly market in which the innovative firm engages in a cost-reducing R&D with uncertain outcomes. We also assume that there will be technology spillover if R&D ends in success. The results show that, in the case of a non-drastic innovation with uncertain outcomes, (i) the optimal licensing contract in terms of fixed-fee and royalty licensing is fixed-fee licensing when product substitution and technology spillover are both small, while it is royalty licensing otherwise; and (ii) if two-part tariff licensing is available, it is superior (equivalent) to royalty licensing when technology spillover is small (large), but always better than fixed-fee licensing for any degree of product substitution and technology spillover. Moreover, the results also indicate that the probability of R&D success in each licensing method plays an important role in determining the innovative firm's optimal licensing strategy. Keywords: Technology licensing; Bertrand competition; Uncertain R&D outcomes; Technology spillover (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:68:y:2018:i:c:p:117-126 DOI: 10.1016/j.econmod.2017.06.013 Access Statistics for this article Economic Modelling is currently edited by S. Hall and P. Pauly More articles in Economic Modelling from Elsevier |
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