Munich Personal RePEc Archive

Tariff Induced Fee Licensing and Consumers’ Welfare

Kabiraj, Tarun (2012): Tariff Induced Fee Licensing and Consumers’ Welfare.

[img]
Preview
PDF
MPRA_paper_59256.pdf

Download (314kB) | Preview

Abstract

In a Cournot duopoly with one foreign firm and one domestic firm we show that a tariff on foreign products can be an effective instrument to influence the licensing strategy of the foreign firm. Under free trade technology transfer occurs with a royalty contract, but a suitably designed tariff rate can induce the foreign firm transfer its superior technology to the domestic firm under the fee contract where consumers’ welfare is maximized and social welfare is larger. Such a policy appears to be catchy from the viewpoint of a political party in power

UB_LMU-Logo
MPRA is a RePEc service hosted by
the Munich University Library in Germany.