Munich Personal RePEc Archive

Royalty and license fee under oligopoly with or without entry of innovator: Two-step auction

Hattori, Masahiko and Tanaka, Yasuhito (2017): Royalty and license fee under oligopoly with or without entry of innovator: Two-step auction.

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Abstract

When an outside innovating firm has a cost-reducing technology, it can sell licenses of its technology to incumbent firms, or enter the market and at the same time sell licenses, or enter the market without license. We examine the definitions of license fees in such situations under oligopoly with three firms, one outside innovating firm and two incumbent firms, considering threat by entry of the innovating firm using a two-step auction. Also we suppose that the innovating firm sells its licenses using a combination of royalty per output and a fixed license fee.

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