Intra-brand patent licensing with inter-brand competition

Jiyun Cao and Uday Sinha

Mathematical Social Sciences, 2020, vol. 104, issue C, 71-77

Abstract: The existing literature has considered licensing of a patented cost-reducing innovation either in a homogeneous good industry or in a differentiated goods industry. We consider a new model of patent licensing between producers of a homogeneous good when there is competition from producers of another brand in the market. We find that for drastic innovation, the optimal intra-brand patent licensing involves only fixed fee when the degree of inter-brand differentiation is low and a two-part tariff otherwise. For non-drastic innovation, the optimal intra-brand patent licensing involves only royalty when the degree of inter-brand differentiation is high, a two-part tariff when it is intermediate, and finally a fixed fee alone when it is low. We also establish that the innovator has more incentive for innovation as an insider than an outsider of this market.

Keywords: Intra-brand patent licensing; Inter-brand competition; Cournot oligopoly; Homogeneous and differentiated goods; Incentive for innovation (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:matsoc:v:104:y:2020:i:c:p:71-77

DOI: 10.1016/j.mathsocsci.2020.01.001

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