License Auctions with Royalty Contracts for Losers
نویسندگان
چکیده
This paper revisits the standard analysis of licensing a cost reducing innovation by an outside innovator to a Cournot oligopoly. We propose a new mechanism that combines elements of a license auction with royalty licensing by granting the losers of the auction the option to sign a royalty contract. The optimal new mechanism eliminates the losses from exclusionary licensing without reducing bidders’ surplus; therefore, it is more profitable than both standard license auctions and pure royalty licensing. We also take into account that the number of licenses must be an integer, which is typically ignored in the literature. JEL classifications: D21, D43, D44, D45.
منابع مشابه
License Auctions with Royalty Contracts for (Winners and) Losers
This paper revisits the licensing of a non–drastic process innovation by an outside innovator to a Cournot oligopoly. We propose a new mechanism that combines a restrictive license auction with royalty licensing. This mechanism is more profitable than standard license auctions, auctioning royalty contracts, fixed–fee licensing, pure royalty licensing, and two-part tariffs. The key features are ...
متن کاملThree Essays on Auctions and Innovation
Innovation is central to development and economic growth. Innovation happens within some institutional framework. Auctions and auction-like mechanisms are institutions that organize transactions between economic agents. In the face of private information, they provide a means of revealing part of that information by inducing competition between agents. If well designed, they make use of the rev...
متن کاملDeterminants of royalty terms: Evidence from technology import contracts of Japan † (Preliminary)
This paper examines the changes of royalty terms of technology import contracts of Japan in 1980s and 1990s, based on the sector-level panel data. Major findings are the following: (1) The share of high royalty contracts increased significantly in 1980s and 1990s, which, however, mainly reflected the change of the composition of imported technologies, especially the increasing share of software...
متن کاملNetwork Effects and Technology Licensing with Fixed Fee, Royalty, and Hybrid Contracts
Technology innovators are faced with the question of whether to license an innovation to other firms, and if so, what type of license it should use. This question takes on paramount importance with information technology innovations that lead to new products and services that exhibit network effects. This paper explores the impact of network effects on the licensing choice. The literature sugge...
متن کاملAn Analysis of Advertising Payments in Franchise Contracts
National advertising is an important ongoing marketing activity in a franchise arrangement. A majority of franchisors require franchisees to pay an advertising royalty as a percentage of gross revenues while some require franchisees to pay a fixed advertising fee. These payments are earmarked for national advertising. We investigate the relationship between the franchisor’s profits and the diff...
متن کامل