 Patent licensing, entry and the incentive to innovateYair Tauman () and Chang Zhao International Journal of Industrial Organization, 2018, vol. 56, issue C, 229-276 Abstract: We analyze the economic impact of process innovations where the innovator auctions off licenses to both potential entrants and incumbent firms. It is shown that opening the market to entrant licensees, the incentive to innovate is maximized if the industry is initially a monopoly, as was envisioned by Schumpeter (1942). This is in contrast to previous literature on licensing of process innovations when entry is excluded: the incentive to innovate is maximized in an oligopoly market if licenses are sold by auction (Sen and Tauman, 2007) or in a competitive market if licenses are sold by royalty (Arrow, 1962). The post-innovation market structure, the diffusion of the innovation and the social welfare are analyzed and compared with the case where entry is excluded. Keywords: Innovation; Patent licensing; Entry; Incentive to innovate (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:indorg:v:56:y:2018:i:c:p:229-276 DOI: 10.1016/j.ijindorg.2017.06.010 Access Statistics for this article International Journal of Industrial Organization is currently edited by P. Bajari, B. Caillaud and N. Gandal More articles in International Journal of Industrial Organization from Elsevier |
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