Optimal Licensing Strategy: Royalty or Fixed Fee?

Licensing a cost-reducing innovation through a royalty has been shown to be superior to licensing by means of a fixed fee for an incumbent licensor. This note shows that this result relies crucially on the assumption that the incumbent licensor can sell its cost-reducing inno-vation to all industry players. If, for any reason, only some competitors could be reached through a licensing contract, then a fixed fee might be optimally chosen.

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Year of publication:	2004
Authors:	Fosfuri, Andrea ; Roca, Esther
Published in:	International Journal of Business and Economics. - College of Business, ISSN 1607-0704. - Vol. 3.2004, 1, p. 13-19
Publisher:	College of Business
Subject:	licensing contract \| Cournot competition \| strategic effects

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Extent:	application/pdf text/html
Type of publication:	Article
Classification:	D45 - Rationing; Licensing
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10010600160