Tariffs, Licensing Contracts, and Consumers' Welfare

Tarun Kabiraj

No 9149, EcoMod2016 from EcoMod

Abstract: In a duopolistic trade model we have shown that a tariff can influence the optimal licensing strategy of the foreign firm. A high tariff will induce fee licensing and a low tariff will result in a royalty licensing. From the viewpoint of the consumers both high tariff and high royalty are distortaionary; hence there is a trade-off between a tariff and a royalty. Then the local government can suitably choose a tariff rate that will induce fee licensing, then consumers' welfare is maximized. In the paper we have used the tools and techniques of game theory and industrial organization literature to the issue of technology licensing and consumers' welfare. We have shown that a tariff on foreign products can be strategically chosen so that the foreign firm transfers its superior technology to a domestic firm under a fee licensing contract and consumers' welfare is maximized.

Keywords: It is a theoretical work; so applicable to any country; Trade and regional integration; Game theoretical models (search for similar items in EconPapers)
Date: 2016-07-04
New Economics Papers: this item is included in nep-int and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://ecomod.net/system/files/Kabiraj.Tariffs%2C% ... sumers%20Welfare.pdf
Our link check indicates that this URL is bad, the error code is: 403 Forbidden (http://ecomod.net/system/files/Kabiraj.Tariffs%2C%20Licensing%20Contracts%20and%20Consumers%20Welfare.pdf [301 Moved Permanently]--> https://ecomod.net/system/files/Kabiraj.Tariffs,%20Licensing%20Contracts%20and%20Consumers%20Welfare.pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ekd:009007:9149

Access Statistics for this paper

More papers in EcoMod2016 from EcoMod Contact information at EDIRC.
Bibliographic data for series maintained by Theresa Leary ().