Vertical Licensing, Input Pricing, and Entry
Elpiniki Bakaouka and
Chrysovalantou Milliou ()
No 6316, CESifo Working Paper Series from CESifo Group Munich
We explore the incentives of a vertically integrated incumbent firm to license the production technology of its core input to an external firm, transforming the licensee into its input supplier. We find that the incumbent opts for licensing even when licensing also transforms the licensee into one of its direct competitors in the final products market. In fact, the licensee's entry into the final products market, although increases the competition and the cost that the licensor faces, it reinforces, instead of weakens, the licensing incentives. Furthermore, the licensee's entry augments the positive welfare implications of vertical licensing.
Keywords: licensing; vertical relations; entry; two-part tariffs; outsourcing (search for similar items in EconPapers)
JEL-codes: L22 L24 L13 L42 D45 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com, nep-ipr and nep-mic
References: Add references at CitEc
Citations Track citations by RSS feed
Downloads: (external link)
Working Paper: Vertical Licensing, Input Pricing, and Entry (2016)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_6316
Access Statistics for this paper
More papers in CESifo Working Paper Series from CESifo Group Munich Contact information at EDIRC.
Series data maintained by Klaus Wohlrabe ().