Technology transfer in a linear city with symmetric locations

Bouguezzi, Fehmi (2010): Technology transfer in a linear city with symmetric locations.

Abstract

This paper compares patent licensing regimes in a Hotelling model where firms are located symmetrically and not necessary at the end points of the city. I suppose that one of the firms owns a process innovation reducing the marginal unit cost. This patent holding firm will decide to sell a license or not to the non innovative firm and will choose, when licensing, between a fixed fee or a royalty. The key difference between this paper and other papers is that here I suppose that firms are not static and can move along the linear city symmetrically. I find that when there is no licensing, Nash equilibrium exists only when innovation is non drastic. I also find that royalties licensing is better than fixed fee licensing when innovation is small. When the innovation is intermediate I find that fixed fee is better than a royalty. The paper shows that a fixed fee is not better than a non licensing regime independently of the innovation size and the optimal licensing regime is royalties when innovation is small. Finally, I show that a patent holding firm should not license its innovation when it is intermediate or drastic

• Item Type: MPRA Paper
• Language: English
• Keywords: Hotelling model, Technology transfer, Patent licensing
• Subjects: L - Industrial Organization > L0 - General; D - Microeconomics > D4 - Market Structure, Pricing, and Design > D45 - Rationing ; Licensing

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