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Per Unit and Ad Valorem Royalties in a Patent Licensing Game

Marta Montinaro, Rupayan Pal () and Marcella Scrimitore ()
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Marta Montinaro: University of Salento

No 2020.14, Working Papers from Fondazione Eni Enrico Mattei

Abstract: In a context of product innovation, we study two-part tariff licensing between a patentee and a potential rival which compete in a differentiated product market characterized by network externalities. The latter are shown to crucially affect the relative profitability of Cournot vs. Bertrand when a per unit royalty is applied. By contrast, we find that Cournot yields higher profits than Bertrand under ad valorem royalties, regardless of the strength of network effects.

Keywords: Licensing; Product Innovation; Bertrand; Cournot; Network Effects (search for similar items in EconPapers)
JEL-codes: D43 L13 L20 (search for similar items in EconPapers)
Date: 2020-10
New Economics Papers: this item is included in nep-com, nep-gth, nep-ino and nep-ipr
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Working Paper: Per Unit and Ad Valorem Royalties in a Patent Licensing Game (2020) Downloads
Working Paper: Per unit and ad valorem royalties in a patent licensing game (2020) Downloads
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