Does licensing promote innovation?
Economics of Innovation and New Technology, 2020, vol. 29, issue 2, 206-221
We analyse the impact of licensing on the equilibrium amount of cost-reducing innovation under several licensing mechanisms in the case of a duopoly model with heterogeneous firms. Under a wide class of licensing mechanisms, we find that as product substitutability increases, the possibility of higher innovation under licensing compared to no licensing decreases. Therefore, firmsâ€™ heterogeneity is crucial to assess whether licensing incentivizes or not R&D cost-reducing investments.
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Persistent link: https://EconPapers.repec.org/RePEc:taf:ecinnt:v:29:y:2020:i:2:p:206-221
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