Licensing Process Innovations When Losers' Bids Determine Royalty Rates

Fan, Cuihong; Jun, Byoung Heon; Wolfstetter, Elmar

doi:10.2139/ssrn.1918417

Cited by 7 publications

(5 citation statements)

References 15 publications

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“…2 However, Giebe and Wolfstetter (2008) and Fan, Jun, and Wolfstetter (2013) show that an outside innovator can increase his payoff by supplementing license auctions with per unit royalty contracts for those who lose the auction, and Poddar and Sinha (2010) and Fan, Jun, and Wolfstetter (2017) show at different levels of generality that an inside innovator can generally increase his payoff by employing two-part tariffs rather than pure royalty contracts.…”

Section: Modelmentioning

confidence: 99%

Per unit vs. ad valorem royalty licensing

2018

Self Cite

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We consider the licensing of a non-drastic innovation by an innovator who interacts with a potential licensee in a downstream Cournot market. We compare two kinds of license contracts: per unit and ad valorem, combined with fixed fees. Assuming that antitrust authorities apply the same principle to review ad valorem royalty license contracts which they apply to per unit royalty license contracts, we show that per unit royalty licensing is more profitable if the licensor is more efficient in using the innovation, whereas ad valorem royalty licensing is more profitable if the licensee is more efficient. This explains why and when these licensing schemes should be observed.

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Section: Modelmentioning

confidence: 99%

Per unit vs. ad valorem royalty licensing

2018

Self Cite

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“…find that in this case there is discontinuity in the bidding range in equilibrium. Fan et al (2013Fan et al ( , 2014 have a model where a patent is auctioned between two firms engaged in a Cournot duopoly where the winner of the auction receives the patent for a fixed fee and then collects royalties from the loser. For example, take the symmetric case of two buyers with values in [v, v] with constant (negative) externality −e.…”

Section: Incomplete Informationmentioning

confidence: 99%

Advances in Auctions

Kaplan

Zamir

2015

Handbook of Game Theory With Economic Applications

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“…And in a companion paper Fan et al (2009) consider the licensing problem with royalty scheme when cost reductions are specific to the firm who adopts the innovation, in line with the private values case considered by Das Varma (2003), Goeree (2003), Jehiel and Moldovanu (2000).…”

Section: Introductionmentioning

confidence: 99%