We present examples of cost-asymmetric duopoly games where the inefficient firm can obtain higher payoff than its efficient rival. Firms compete in a Cournot fashion and their quantities are chosen by their managers. We assume that managers are offered two types of incentive contracts, the pure...

In industries where a patent system is in place, licensing agreements among competing firms often create distortions, as they involve royalties. Royalties are generally considered to be anti-competitive as they raise market prices and reduce consumer welfare. In this paper we propose simple tax...