Ex-ante licensing in sequential innovations
Stefano Comino (),
Fabio Manenti () and
Antonio Nicolo' ()
Games and Economic Behavior, 2011, vol. 73, issue 2, 388-401
The theoretical literature on the cumulative innovation process has emphasized the role of ex-ante licensing – namely, licensing agreements negotiated before the follow-on innovator has sunk its R&D investment – in mitigating the risk of hold-up of future innovations. In this paper, we consider a patent-holder and a follow-on innovator bargaining over the licensing terms in a context where the former firm is unable to observe the timing of the R&D investment of the latter. We show that the possibilities of restoring the R&D incentives by setting the licensing terms appropriately are severely limited.
Keywords: Sequential innovation; Patents; Licensing; Intellectual property; Information acquisition (search for similar items in EconPapers)
JEL-codes: L10 O31 O34 (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:gamebe:v:73:y:2011:i:2:p:388-401
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