Licensing in a Vertically Separated Industry

Arijit Mukherjee

No KERP 2002/09, Keele Economics Research Papers from Centre for Economic Research, Keele University

Abstract: The literature on technology licensing has ignored the importance of market power of the input supplier. In this paper we examine the impact of licensing in the downstream industry when the firms in the upstream industry have market power. We show that licensing in the downstream industry can make the upstream industry more competitive. However, licensing in the downstream industry is profitable if and only if licensing changes the concentration in the upstream industry. We also show that a monopolist in the final goods market has the incentive for licensing if licensing changes the market structure of the upstream industry.

Keywords: Entry; Licensing; Downstream industry; Upstream industry (search for similar items in EconPapers)
JEL-codes: D43 L13 O34 (search for similar items in EconPapers)
Pages: 21 pages
Date: 2002-09
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Working Paper: Licensing in a Vertically Separated Industry (2002)
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