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Sequential Innovation and the Duration of Technology Licensing

John Gordanier and Chun-Hui Miao

MPRA Paper from University Library of Munich, Germany

Abstract: We model an innovator's choice of payment scheme and duration as a joint decision in a multi-period licensing game with potential sequential innovations and some irreversibility of technology transfer. We find that it may be optimal to license the innovation for less than the full length of the patent and that royalty contracts can be used to overcome a time-consistency problem faced by the innovator. Our results suggest that licensing contracts based on royalty have a longer duration than fixed-fee licenses and are more likely to be used in industries where sequential innovations are frequent.

Keywords: Innovation; Licensing; Patent; Royalty; Technology Leakage; Time Consistency. (search for similar items in EconPapers)
JEL-codes: D86 L13 L24 (search for similar items in EconPapers)
Date: 2009-07
New Economics Papers: this item is included in nep-ino, nep-ipr, nep-pr~ and nep-tid
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https://mpra.ub.uni-muenchen.de/16882/1/MPRA_paper_16882.pdf original version (application/pdf)
https://mpra.ub.uni-muenchen.de/20329/2/MPRA_paper_20329.pdf revised version (application/pdf)

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