Tariff Induced Fee Licensing and Consumers’ Welfare

Tarun Kabiraj

MPRA Paper from University Library of Munich, Germany

Abstract: In a Cournot duopoly with one foreign firm and one domestic firm we show that a tariff on foreign products can be an effective instrument to influence the licensing strategy of the foreign firm. Under free trade technology transfer occurs with a royalty contract, but a suitably designed tariff rate can induce the foreign firm transfer its superior technology to the domestic firm under the fee contract where consumers’ welfare is maximized and social welfare is larger. Such a policy appears to be catchy from the viewpoint of a political party in power

Keywords: Tariffs; Fee licensing; Royalty licensing; Consumers’ welfare (search for similar items in EconPapers)
JEL-codes: D43 F13 L13 (search for similar items in EconPapers)
Date: 2012-03-30
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