Free Licensing in a Differentiated Duopoly

Kabiraj, Tarun and Chatterjee, Rittwik and Chattopadhyay, Srobonti (2020): Free Licensing in a Differentiated Duopoly.

Abstract

The present paper discusses the possibility of free licensing in a model of differentiated duopoly. We have shown that given the market size, the degree of product differentiation and the unit cost of input production, free licensing will occur if the transferred technology is not much superior and the market price of input is sufficiently large. If, however, any of market size, input cost or product substitution goes up, the possibility of free licensing will fall. Our result has an important implication in the context of transboundary pollution. The overall welfare under free licensing will be higher unambiguously.

• Item Type: MPRA Paper
• Language: English
• Keywords: Transferred technology, free licensing, product differentiation, input price, cross-border pollution.
• Subjects: D - Microeconomics > D4 - Market Structure, Pricing, and Design > D43 - Oligopoly and Other Forms of Market Imperfection; D - Microeconomics > D4 - Market Structure, Pricing, and Design > D45 - Rationing ; Licensing; L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L13 - Oligopoly and Other Imperfect Markets; L - Industrial Organization > L2 - Firm Objectives, Organization, and Behavior > L24 - Contracting Out ; Joint Ventures ; Technology Licensing

References

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