Technology transfer with commitment

Arijit Mukherjee

Economic Theory, 2001, vol. 17, issue 2, 345-369

Abstract: This paper considers technology transfer in a duopoly where the firms have two types of commitment strategies: incentive delegation and capacity installation. It turns out that the possibility of technology transfer significantly differs under these two types of commitment as well as depending on whether one or both firms commit. Under strategic incentive delegation, the possibility of technology transfer is minimal when both firms use the incentive delegation strategy and the costs of incentive delegation are negligible. If both firms choose the incentive delegation strategy and the costs of incentive delegation are significant then the possibility of technology transfer rises compared to a situation with no pre-commitment. In case of commitment to a capacity level before production, the possibility of technology transfer does not change when both firms simultaneously commit to their capacity levels. Different sets of results arise when only one firm can pre-commit.

Keywords: Capacity installation; Incentive delegation; Technology licensing. (search for similar items in EconPapers)
JEL-codes: D21 L13 L20 (search for similar items in EconPapers)
Date: 2000-11-14
Note: Received: February 10, 1997; revised version: December 16, 1999
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Citations: View citations in EconPapers (14)

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