International Journal of Business and Economics Volume 5, No. 3 December, 2006

Cournot Competition in a Multiproduct Duopoly: Specialization through Licensing

Luigi Filippini

Università Cattolica, Italy

Abstract

In a duopoly where both firms produce substitutes, we show that under process innovation, specialization is the equilibrium attained with cross-licensing. Each firm produces only the good for which it has an advantage, and social welfare may improve. Patent pool extension confirms the results.

Keywords：cross-licensing, patent pool, specialization, process innovation.

JEL Classifications：D45, O31.

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