Previous literature has mostly considered R&D and licensing activities separately. In this paper we examine the effect of licensing on R&D and social welfare. We show that the effect of licensing on the incentive for doing R&D is ambiguous and depends on the costs of doing R&D. We also show that...

This paper examines how the option for licensing affects research and development (R&D) and social welfare. We find that if cost reduction from R&D is sufficiently small and there is an option of licensing, firms will do non-cooperative R&D. In absence of licensing, firms will do cooperative R&D...

This paper investigates the effect of different patent regimes on R&D investment and social welfare in a duopoly market with uncertain R&D process. We find that strong patent protection increases R&D investment of at least one firm but whether both firms’ R&D investment will be more under...

In a world with private information about the quality of technology we find that there are situations where relatively more technologically superior firm will license its technology but relatively less technologically superior firm will not license its technology. This finding is opposite to the...

The literature on technology licensing has ignored the importance of market power of the input supplier. In this paper we examine the impact of licensing in the downstream industry when the firms in the upstream industry have market power. We show that licensing in the downstream industry can...

Our analysis provides a rationale for the existence of a positive fixed-fee and output royalty in the licensing contracts. In this article, we show that the preference functions play an important role in this respect. As the market expansion effect gets weaker, it reduces the possibility of a...

We show that a monopolist final goods producer may find it profitable to create competition by licensing its technology if the input market is imperfectly competitive. With a centralized union, we show that licensing by a monopolist is profitable under both uniform and discriminatory wage...

Taking technological differences between firms as given, we show that the technologically advanced firm has a stronger incentive for technology licensing under a decentralized unionization structure than with centralized wage setting. Furthermore, We show that, in presence of licensing, the...

We use a duopoly to show how the possibility of licensing ex post R&D affects the decision on R&D organization. We show that whether licensing ex post R&D affects the incentive for doing cooperative R&D depends on the nature of cooperative R&D. If the firms do cooperative R&D to avoid...