DECISION MAKING ON STRATEGIC ENVIRONMENTAL TECHNOLOGY LICENSING: FIXED-FEE VERSUS ROYALTY LICENSING METHODS

Ming-Chung Chang (), Jin-Li Hu () and Gwo-Hshiung Tzeng ()
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Gwo-Hshiung Tzeng: Department of Information Management, Kainan University, No. 1 Kainan Rd., Luchu, Taoyuan County 338, Taiwan;

International Journal of Information Technology & Decision Making (IJITDM), 2009, vol. 08, issue 03, 609-624

Abstract: Because of a deterioration in the quality of the environment, this paper studies the effects of the environment and the economy on environmental technology licensing in a homogeneous Cournot duopoly model in order to reduce environmental pollution and hence improve social welfare. To this end, two licensing methods — namely, a fixed-fee licensing method and a royalty licensing method — are compared. It is found that a high emission tax rate induces the innovator to not license the environmental technology to the licensee under the fixed-fee licensing method. As for social welfare, a large innovation scale of environmental technology does not guarantee that social welfare will be maximized. Finally, a large innovation scale of environmental technology is likely to increase consumer surplus if the marginal environmental damage is significant. Consumers are likely to prefer royalty licensing to fixed-fee licensing. This conclusion differs from Wang's finding in 2002.

Keywords: Game theory; licensing; innovation; fixed-fee; royalty (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (1)

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DOI: 10.1142/S0219622009003545

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