License Auctions with Royalty Contracts for (Winners and) Losers
Thomas Giebe () and
Elmar Wolfstetter ()
Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems from Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich
This paper revisits the licensing of a nonâ€“drastic process innovation by an outside innovator to a Cournot oligopoly. We propose a new mechanism that combines a restrictive license auction with royalty licensing. This mechanism is more profitable than standard license auctions, auctioning royalty contracts, fixedâ€“fee licensing, pure royalty licensing, and two-part tariffs. The key features are that royalty contracts are auctioned and that losers of the auction are granted the option to sign a royalty contract. Remarkably, combining royalties for winners and losers makes the integer constraint concerning the number of licenses irrelevant.
Keywords: patents; licensing; auctions; royalty; innovation; R&D; mechanism design (search for similar items in EconPapers)
JEL-codes: D21 D43 D44 D45 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com, nep-ino, nep-ipr, nep-pr~ and nep-mic
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Journal Article: License auctions with royalty contracts for (winners and) losers (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:trf:wpaper:199
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