This paper shows that subsidy can naturally emerge as part of the equilibrium strategy of an innovator of a cost-reducing innovation in a Cournot oligopoly when the innovator is endowed with combinations of upfront fee and royalty. It is further shown that there are robust regions where the...

We show that a welfare maximizing planner in a Cournot oligopoly can easily implement the socially optimal outcome by offering the firms a per unit subsidy in return for upfront fees. The planner announces a subsidy and auctions it off to a limited number of firms. It is shown that if at least...

In this paper, we focus on price competition between several multiproduct firms which produce differentiated systems, each consisting of two complementary products. It is shown here that if firms are restricted to pure component pricing (bundling is not allowed) whenever components produced are...