Licensing a new product: Fee vs. royalty licensing with unionized labor market

Mukherjee, Arijit

doi:10.1016/j.labeco.2009.09.003

Cited by 20 publications

(10 citation statements)

References 36 publications

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“…Arya et al, 2008;Li & Song, 2009;Kabiraj & Lee, 2011;Nabin et al, 2011;Chang et al, 2013), outside enterprise technology innovation (e.g. Sen & Stamatopoulos, 2009;Li & Wang, 2010;Mukherjee, 2010), product quality improvement (e.g. Stamatopoulos & Tauman, 2008), imitation costs (e.g.…”

Section: Literature Reviewmentioning

confidence: 99%

Technology Licensing in a Network Product Market: Fixed‐Fee versus Royalty Licensing

et al. 2018

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This study investigates pricing and technology licensing decisions in a two‐echelon supply chain with one upstream firm that provides a key input to two downstream firms. We assume that one of the downstream firms owns a licensable innovation that exhibits network effects and that the other can either accept the licence from the innovator or develop a substitutable innovation. We analyse the effects of the producer‐innovator's two alternative licensing strategies (i.e. fixed‐fee and royalty licensing) on the members of the supply chain and the supply chain's efficiency. We find that royalty licensing is optimal with low network effects. For high network effects, the innovating firm's optimal licensing strategy depends on the market size and the potential licensee's cost of developing a substitutable innovation. We also find that royalty licensing can achieve better coordination of the supply chain than fixed‐fee licensing.

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Section: Literature Reviewmentioning

confidence: 99%

Technology Licensing in a Network Product Market: Fixed‐Fee versus Royalty Licensing

et al. 2018

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“…Their results reveal that the optimal licensing contract should be three-part tariff licensing, namely, payment in advance, milestone payment, and royalty because of disparities between the estimated value licensor and licensee and the limited control of the licensor over the R&D efforts of the licensee. Mukherjee [19] figured out that as long as the Union has complete control over the bargain, licensee firms would pay lesser salaries under the royalty licensing situation than under auction or fixedfee licensing, regardless of whether the Union structure is a centralized control mode or a decentralized control mode. Royalty licensing is better than fixed-fee licensing and auction licensing for external innovators because the positive effects of low salary outweigh the negative effects of firm margin costs posed by the royalty licensing rate.…”

Section: Literature Reviewmentioning

confidence: 99%

“…When < 0.5, the optimal licensing strategy is two-part tariff licensing. Based on (19), the optimal royalty rate is the same as (24). Thus, the optimal fixed-fee is *…”

Section: Two-part Tariff Licensingmentioning

confidence: 99%

Technology Licensing Strategy for Network Product in a Service Industry

Hong

Zhao

et al. 2015

Mathematical Problems in Engineering

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Technology licensing has gained significant attention in literature and practice as a rapid and effective way to improve firm’s capability of technology innovation. In this paper, we investigate a duopolistic service provider competition market, where service providers develop and sell a kind of network product. In this setting, we analyze the innovating service provider’s four licensing strategies: no licensing, fixed fee licensing, royalty licensing, and two-part tariff licensing. The literature suggests that when the network products can be completely substituted, two-part tariff licensing is the optimal strategy of the innovating service provider. We find that when the network products cannot be completely substituted, two-part tariff licensing is not always optimal. The degree of the product differentiation, the intensity of the network effects, and the R&D cost of the potential licensee play a key role in determining the innovating service provider’s optimal licensing strategies.

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“…Instead, the payment schemes in licensing contracts may consist in per‐unit royalties, lump‐sum payments, two‐part tariffs, or more complicated schemes. Given the frequent use of linear royalties, we consider these simple licensing contracts to be a reasonable approximation to many observed contracts (see Gallini and Winter, , and, recently, Mukherjee, ).…”

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confidence: 99%

Some Unintended Consequences of Parallel Trade in Pharmaceuticals

Matteucci

Reverberi

2014

Manage. Decis. Econ.

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It is widely argued that international arbitrage, or parallel trade (PT), in patented drugs may increase consumer surplus in the relevant countries but at the expense of R&D investment. We show how the effects of PT depend on the vertical contract (linear pricing or dual pricing) between the manufacturer and the foreign licensee or distributor and on whether and how drug prices are regulated and reimbursed. We find that, contrary to what policy makers generally predict, we should be more concerned with the impact of PT on aggregate consumer surplus than on R&D investment.

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Licensing a new product: Fee vs. royalty licensing with unionized labor market

Cited by 20 publications

References 36 publications

Technology Licensing in a Network Product Market: Fixed‐Fee versus Royalty Licensing

Technology Licensing in a Network Product Market: Fixed‐Fee versus Royalty Licensing

Technology Licensing Strategy for Network Product in a Service Industry

Some Unintended Consequences of Parallel Trade in Pharmaceuticals

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