The Optimal Licensing Strategy of an Outside Patentee in Vertically-Related Markets

Ming-Chung Chang, Jin-Li Hu, Chin-Hung Lin

Abstract


We extend the model in Kamien and Tauman (1986) by considering vertically-related markets where the outside innovator transfers new technology by means of either a royalty or a fixed fee. Our conclusion is different with Kamien and Tauman (1986) and announces that the optimal licensing strategy for an outside innovator is a royalty contract with a non-exclusion licensing case. When the innovation size is small, the outside innovator’s licensing behavior causes low social welfare.


Full Text: PDF DOI: 10.5539/ijef.v5n3p102

Creative Commons License
This work is licensed under a Creative Commons Attribution 3.0 License.

International Journal of Economics and Finance  ISSN  1916-971X (Print) ISSN  1916-9728 (Online)

Copyright © Canadian Center of Science and Education

To make sure that you can receive messages from us, please add the 'ccsenet.org' domain to your e-mail 'safe list'. If you do not receive e-mail in your 'inbox', check your 'bulk mail' or 'junk mail' folders.