Royalty licensing in vertically related markets

Elpiniki Bakaouka

Economics Letters, 2025, vol. 253, issue C

Abstract: We compare two royalty licensing contracts: per-unit and ad valorem in a vertical market. The licensor always prefers a per-unit over an ad valorem royalty contract. Licensing has a greater positive impact on both consumer and total welfare under an ad valorem royalty.

Keywords: Licensing; Vertical relations; Ad valorem royalty; Per-unit royalty; Entry (search for similar items in EconPapers)
JEL-codes: D45 L13 L22 L24 L42 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:253:y:2025:i:c:s0165176525002095

DOI: 10.1016/j.econlet.2025.112372

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