Gordanier, John and Chun-Hui, Miao (2009): On the Duration of Technology Licensing.
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We model an innovator's choice of payment scheme and duration as a joint decision in a multi-period licensing game with potential sequential innovations and some irreversibility of technology transfer. We find that it may be optimal to license the innovation for less than the full length of the patent and that royalty contracts can be more profitable than fixed-fee licensing even in the absence of information asymmetry and risk aversion. Moreover, licensing contracts based on royalty have a longer duration than fixed-fee licenses and are more likely to be used in industries where sequential innovations are frequent and intellectual property protection is weak. Our paper also highlights an important link between the study of technology licensing and the theory of durable goods.
|Item Type:||MPRA Paper|
|Original Title:||On the Duration of Technology Licensing|
|Keywords:||Innovation, Licensing, Patent, Royalty, Technology Leakage, Time Consistency.|
|Subjects:||D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D86 - Economics of Contract: Theory
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
|Depositing User:||Chun-Hui Miao|
|Date Deposited:||01. Feb 2010 00:28|
|Last Modified:||12. Feb 2013 23:26|
Anand, B.N. and T. Khanna, "The Structure of Licensing Contracts," Journal of Industrial Economics, 2000, 48 (1), 103�135.
Available Versions of this Item
Sequential Innovation and the Duration of Technology Licensing. (deposited 21. Aug 2009 09:10)
- On the Duration of Technology Licensing. (deposited 01. Feb 2010 00:28) [Currently Displayed]