Patent Licensing and Capacity in a Cournot Model

Stefano Colombo (), Luigi Filippini and Debapriya Sen

Review of Industrial Organization, 2023, vol. 62, issue 1, No 4, 45-62

Abstract: Abstract We consider the problem of patent licensing in a Cournot duopoly in which the innovator (patentee) is one of the firms and it is capacity constrained. We show that when the patentee can produce a relatively small (relatively large) quantity, it prefers licensing by means of a fixed fee (unit royalty). When the patentee can set two-part tariffs in the form of combinations of fixed fees and unit royalties, it charges a positive fixed fee if and only if it is limited to producing a relatively small quantity. We also show that with combinations of fixed fees and royalties, the royalty rate is lower than is true for the standard case.

Keywords: Patent licensing; Cournot duopoly; Capacity constraint (search for similar items in EconPapers)
JEL-codes: D45 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (3)

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DOI: 10.1007/s11151-022-09886-7

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