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On the superiority of fixed fee over auction in asymmetric markets

Giorgos Stamatopoulos () and Tami Tauman

Games and Economic Behavior, 2009, vol. 67, issue 1, 331-333

Abstract: It is well known that selling licenses for the use of a cost-reducing innovation by auction yields a higher revenue compared to fixed fee in a symmetric Cournot industry. In this note we show that this result can be reversed in an asymmetric Cournot industry, i.e., the fixed fee policy can generate a strictly higher revenue than the auction policy in an industry where prior to the innovation firms are cost-asymmetric.

Keywords: Cost-reducing; innovation; Asymmetric; firms; Fixed; fee; Auction (search for similar items in EconPapers)
Date: 2009
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Handle: RePEc:eee:gamebe:v:67:y:2009:i:1:p:331-333