Considering the licensing of a drastic cost-reducing innovation by an outside innovator in an n-firm Cournot oligopoly, we show that when the innovator uses combinations of fees and royalties, there are either n - 1 or n optimal licensing policies.

We provide a game-theoretic alternative of the kinked demand curve explanation of rigid prices. We analyze a duopoly where firms choose quantities and objectives. We identify cases under which firms choose to maximize their revenue. Under these cases, prices are insensitive to unit costs.