Licensing Innovation in Mixed Multinational Markets with Stackelberg Leadership

Ali Dadpay, Faraz Farhidi, Greg Bell and J. Alejandro Gelves
Additional contact information
Ali Dadpay: Gupta College of Business, University of Dallas
Faraz Farhidi: NV Energy
Greg Bell: Gupta College of Business, University of Dallas
J. Alejandro Gelves: Raymond A. Mason School of Business, College of William and Mary

Journal of Industry, Competition and Trade, 2022, vol. 22, issue 3, No 4, 428 pages

Abstract: Abstract This article departs from existing literature by including licensing in a multinational market where the innovator is the Stackelberg leader. When the domestic mixed-ownership firm is the leading innovator, it focuses on local social welfare. Thus, the royalty it charges becomes a function of level privatization. As the private share in the domestic firm increases, the leader increases the royalty it charges. The relationship is reversed when the foreign firm becomes the innovator. The optimal licensing policy is a mix of a fixed fee and a royalty, with a difference that a Stackelberg leader charges more than a Cournot competitor.

Keywords: Mixed oligopoly; Innovation; Optimal licensing; Partial privatization; Unit royalty; Fixed fee (search for similar items in EconPapers)
JEL-codes: I20 I21 I23 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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DOI: 10.1007/s10842-022-00389-5

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