Per Unit and Ad Valorem Royalties in a Patent Licensing Game

In a context of product innovation, we study two-part tariff licensing between a patentee and a potential rival which compete in a differentiated product market characterized by network externalities. The latter are shown to crucially affect the relative profitability of Cournot vs. Bertrand when a per unit royalty is applied. By contrast, we find that Cournot yields higher profits than Bertrand under ad valorem royalties, regardless of the strength of network effects

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Year of publication:	2020
Authors:	Montinaro, Marta ; Pal, Rupayan ; Scrimitore, Marcella
Publisher:	[S.l.] : SSRN
Subject:	Patent \| Lizenz \| Licence \| Spieltheorie \| Game theory

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