Per-unit versus ad-valorem royalty licensing in a Stackelberg market

Manel Antelo and Lluis Bru

MPRA Paper from University Library of Munich, Germany

Abstract: We consider licensing of a non-drastic innovation by a patentholder who interacts with a potential licensee in a Stackelberg duopoly. We compare per-unit and ad-valorem royalty contracts, showing why and when each licensing deal should be observed. We find that ad-valorem royalty is preferred by a licensor that plays as the leader, but per-unit royalty is more profitable if the licensor is the follower. We also find that only innovations that do not hurt consumers are socially beneficial. Finally, licensor’s leadership or followership and innovation size determine licensing impact on the incentive to disseminate an innovation.

Keywords: Licensing; leader and follower; welfare (search for similar items in EconPapers)
JEL-codes: D43 D45 (search for similar items in EconPapers)
Date: 2020-12
New Economics Papers: this item is included in nep-com, nep-ipr and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Per-unit versus ad-valorem royalty licensing in a Stackelberg market (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:105742

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