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A Macroeconomic Model of Imperfect Competition with Patent Licensing

Hui-ting Hsieh () and Ching-chong Lai
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Hui-ting Hsieh: Department of Economics, National Chung Cheng University, Taiwan

No 13-A007, IEAS Working Paper : academic research from Institute of Economics, Academia Sinica, Taipei, Taiwan

Abstract: This paper sets up an imperfectly competitive macroeconomic model that features the strategic interaction between the patent-holding firm and licensees, and uses it to analyze the relevant macro variables under various licensing arrangements. Some main findings emerge from the analysis. First, the equilibrium aggregate output and aggregate consumption under fixed-fee and royalty licensing regimes are always greater than those under the no licensing regime. Moreover, the equilibrium aggregate output and consumption under the fixed-fee licensing regime are always greater than those under the royalty licensing regime. Second, with the higher (lower) technology level the patent-holder prefers the fixed-fee (royalty) contract. Third, welfare could be improved through technology transfer, and the level of welfare under the fixed-fee licensing regime is higher than that under the royalty licensing regime.

Keywords: Imperfect competition; Macroeconomic model; Fixed-fee licensing; Royalty licensing (search for similar items in EconPapers)
JEL-codes: D45 E10 L16 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2013-08
New Economics Papers: this item is included in nep-com, nep-ino, nep-ipr, nep-pr~ and nep-mac
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Journal Article: A Macroeconomic Model of Imperfect Competition with Patent Licensing (2015) Downloads
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