This paper develops a theoretical framework in which patents and control of downstream co-specialized assets affect the way firms profit from innovation according to the stage of industry evolution. We argue that in early stages of industry life cycle the effectiveness of patents in protecting...

This paper empirically analyzes the determinants of the choice between wholly owned subsidiary and technology licensing as a strategy for expansion abroad. We use a new and comprehensive database on worldwide plant level investments in the chemical industry during the 1981-1991 period. We find...

In technology-based industries, many incumbent firms license their technology to other firms that will potentially compete with them. Such a strategy is difficult to explain within traditional models of licensing. This paper extends the literature on licensing by relaxing the widespread...

The licensing of technology entails a tradeoff: Licensing payments net of transaction costs (revenue effect) must be balanced against the lower price-cost margin and/or reduced market share implied by increased competition (profit dissipation effect) from the licensee. We argue that the presence...