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Revenue royalties

Stefano Colombo () and Luigi Filippini ()

Journal of Economics, 2016, vol. 118, issue 1, No 3, 47-76

Abstract: Abstract Under the assumption of decreasing returns to scale, we compare several licensing mechanisms—per-unit royalty, an ad valorem royalty, and a revenue-royalty, and combinations with fixed fees—for an insider patentee. In the case of a non-drastic innovation, the patentee maximizes its profits by offering, respectively, an ad valorem royalty, a revenue-royalty and a two-part per-unit royalty, if the cost function is scarcely or highly convex, moderately-low convex, and moderately-high convex. In the case of a drastic innovation, the patentee always offers an ad valorem royalty contract.

Keywords: Patent licensing; Convex cost function; Royalties on revenues; Royalties on profits; Per-unit royalties (search for similar items in EconPapers)
JEL-codes: D45 (search for similar items in EconPapers)
Date: 2016
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Persistent link: https://EconPapers.repec.org/RePEc:kap:jeczfn:v:118:y:2016:i:1:d:10.1007_s00712-015-0459-z

DOI: 10.1007/s00712-015-0459-z

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