Product licensing in a Stackelberg industry
Manel Antelo and
Lluis Bru
MPRA Paper from University Library of Munich, Germany
Abstract:
We study in a Stackelberg industry the licensing of a product that embodies an innovation (a quality-improving product). The innovation may be owned by the firm that acts as the leader or follower in the marketplace. If the innovation owner is the market leader, licensing takes place and consists of a revenue royalty with no fixed payment, but is not socially desirable, because it yields a more collusive industry. However, if the innovation owner is the market follower, licensing does not hold, even though it would be welfare enhancing and thus socially desirable. Thus, stimulating licensing by subsidizing a follower firm owning a product innovation would benefit both consumers and society as a whole.
Keywords: Vertical differentiation; licensing; per-unit and ad-valorem royalties; market leader and follower; welfare (search for similar items in EconPapers)
JEL-codes: D43 D45 (search for similar items in EconPapers)
Date: 2022-01
New Economics Papers: this item is included in nep-bec, nep-com and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations:
Downloads: (external link)
https://mpra.ub.uni-muenchen.de/113985/1/MPRA_paper_113985.pdf original version (application/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:pra:mprapa:113985
Access Statistics for this paper
More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter ().