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Profit-sharing licensing

Shuai Niu ()
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Shuai Niu: Shandong University

Journal of Economics, 2017, vol. 121, issue 3, 267-278

Abstract: Abstract Profit-sharing licensing is quite a common business practice. In a Cournot duopoly model, we showed that if not subject to any restrictions this kind of technology for equity deal would lead to a decline in industry output and hurt consumers. To avoid the industry output contraction and protect the interests of consumers, the government can intervene in licensing by requiring that the profit-sharing rate specified by a licensing contract should not exceed the percentage difference of involved firms’ equilibrium outputs before licensing.

Keywords: Technology; Equity; Licensing; Welfare; Policy (search for similar items in EconPapers)
JEL-codes: L13 L24 L41 (search for similar items in EconPapers)
Date: 2017
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Handle: RePEc:kap:jeczfn:v:121:y:2017:i:3:d:10.1007_s00712-017-0528-6