|
|
|
Volume 3, No. 1,
April 2004
|
|
|
Optimal
Licensing Strategy: Royalty or Fixed Fee?
|
|
|
|
Andrea
Fosfuri*
|
|
|
Department of Business
Administration, Universidad Carlos III de Madrid,
Spain and CEPR, London,
U.K.
|
|
|
|
Esther
Roca
|
|
|
ICADE,
Spain
|
|
|
|
Abstract
|
|
|
|
|
Licensing a cost-reducing innovation
through a royalty has been shown to be superior to
licensing by means of a fixed fee for an incumbent
licensor. This note shows that this result relies
crucially on the assumption that the incumbent
licensor can sell its cost-reducing inno-vation to all
industry players. If, for any reason, only some
competitors could be reached through a licensing
contract, then a fixed fee might be optimally chosen.
|
|
|
|
Key words
:
licensing contract; Cournot competition;
strategic effects
|
|
JEL classification
: D45
|
|
|
Back
|
|