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On the number of licenses under symmetric versus asymmetric information with signaling

Antelo, Manel and Sampayo, Antonio (2014): On the number of licenses under symmetric versus asymmetric information with signaling.

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Abstract

We analyze a two-period licensing game in which a non-producer upstream patent holder licenses an innovation to either one or two downstream licensees for a payment based on the licensee’s expected per-period profit. Licensees have private information about the innovation’s value, and their period-1 output may signal that value. We find that two licensees are more likely to be preferred under asymmetric information with signalling than under symmetric information.

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