EconPapers    
Economics at your fingertips  
 

Per-Unit Royalty vs Fixed Fee: The Case of Weak Patents

Rabah Amir (), David Encaoua () and Yassine Lefouili ()
Additional contact information
Yassine Lefouili: GREMAQ - Groupe de recherche en économie mathématique et quantitative - UT Capitole - Université Toulouse Capitole - UT - Université de Toulouse - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique

Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) from HAL

Abstract: This paper explores a licensor's choice between charging a per-unit royalty or a fixed fee when her innovation is covered by a weak patent, i.e. a patent that is likely to be invali- dated by a court if challenged. Using a general model where the nature of competition is not speci ed, we show that the patent holder prefers to use a per-unit royalty scheme if the strategic e¤ect of an increase in a potential licensee's unit cost on the aggregate equi- librium pro t is positive. To show the mildness of the latter condition, we establish that it holds in a Cournot (resp. Bertrand) oligopoly with homegenous (resp. heterogenous) products under very general assumptions on the demands faced by rms. As a byproduct of our analysis, we contribute to the oligopoly literature by o¤ering some new insights of independent interest regarding the e¤ects of cost variations on Cournot and Bertrand equilibria.

Keywords: Keywords: Licensing Schemes; Weak Patents; Patent Litigation.; JEL Classi cation: D45; L10; O32; O34. (search for similar items in EconPapers)
Date: 2011-02
New Economics Papers: this item is included in nep-com, nep-ino, nep-ipr, nep-pr~ and nep-tid
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00595493v1
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

Downloads: (external link)
https://shs.hal.science/halshs-00595493v1/document (application/pdf)

Related works:
Working Paper: Per-Unit Royalty vs Fixed Fee: The Case of Weak Patents (2011) Downloads
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:hal:cesptp:halshs-00595493

Access Statistics for this paper

More papers in Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) from HAL
Bibliographic data for series maintained by CCSD ().

 
Page updated 2025-03-19
Handle: RePEc:hal:cesptp:halshs-00595493