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

Zhang, Huaige; Wang, Xuejun; Hong, Xianpei; Lu, Qiang

doi:10.1111/1475-4932.12385

Cited by 15 publications

(6 citation statements)

References 30 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…In contrast, fixed-fee policies result in higher consumer surplus and welfare than royalty and FR policies when the industry size is relatively large. Zhang et al (2018) find that royalty licensing is optimal when the network effect is low. Hsu et al (2019) find that ad valorem royalty licensing is superior to per-unit royalty licensing for the supplier if cost-reducing innovation is non-drastic.…”

Section: Theoretical Backgroundmentioning

confidence: 89%

Technology Sharing and Competitiveness in a Stackelberg Model

Chen¹,

Wei²,

Liu³

et al. 2021

JOC

View full text Add to dashboard Cite

The existing literature has made great achievements in technology sharing (licensing patents) contracts, which has defects in the selection of oligopoly models, the setting of innovation subjects, the consideration of product heterogeneity, and production costs. This paper aims to reveal the competitiveness strategies of leaders and followers for innovation, technology sharing, and sharing fees in a Stackelberg market. The three-stage sequential game method is used to achieve the objective. The results are as follows. First, whether an enterprise uses innovation or shares technology is related to the fixed cost of innovation, the return on innovation, and product differentiation. It will hinder innovation activities if the fixed cost of innovation is too high, the return on innovation is too low, or the products are too homogeneous. A relatively low return on innovation makes it possible for the two enterprises to engage in sharing. However, with a relatively high return on innovation, only a high level of product differentiation can ensure technology sharing. Second, the optimal sharing fee is dynamic, showing an upward and then downward trend as the return on innovation grows. Product differentiation has an uncertain impact on the cost. Third, either the leader or the follower is likely to be the optimal bearer of social responsibility depending on the returns on innovation and product differentiation. This study has theoretical significance for optimizing technology-sharing decisions, improving competitiveness for enterprises, and formulating effective industrial policy for the government. And it provides some practical guidance for competition and cooperation between enterprises with technological innovation behavior.

show abstract

Section: Theoretical Backgroundmentioning

confidence: 89%

Technology Sharing and Competitiveness in a Stackelberg Model

Chen¹,

Wei²,

Liu³

et al. 2021

JOC

View full text Add to dashboard Cite

show abstract

“…The difference in their finding is determined by whether the patent holder is an insider or not. Some studies examine the impact of other factors such as different market structures (Katz and Shapiro, 1985), type of competition (Kabiraj, 2004), network effect (Lin and Kulatilaka, 2006;Zhang et al, 2018), imitation costs (Kogan et al, 2013), cross-licensing (Zhao, 2017;Jeon and Lefouili, 2018;Choi and Gerlach, 2019;Wang and Huang, 2019;Zhao et al, 2022); and information asymmetry (Sen and Bhattacharya, 2017;Jeon, 2019;Hong et al, 2021).…”

Section: Literature Reviewmentioning

confidence: 99%

“…In recent times, as innovation-based competition in business and economic activities become more intense, technology licensing has attracted increasing attention in many industries for its value in innovation development and commercialization (Arora et al, 2013;Agrawal et al, 2016;Hong et al, 2017Hong et al, , 2021Wu, 2018). Many factors affect the transfer and commercialization of technologies, such as competition mode (Li and Ji, 2010;Nguyen et al, 2014;Zhao et al, 2022); product differentiation (Nguyen et al, 2014(Nguyen et al, , 2017Bakaouka and Milliou, 2018), imitation costs (Kogan et al, 2013), type of innovation (Agrawal et al, 2016;Chen and Xie, 2018), bargaining power of two parties (Kishimoto, 2020), and network effect (Lin and Kulatilaka, 2006;Zhang et al, 2018). In addition, mixed competition has different influences on market equilibrium as well as on social welfare compared with those under symmetric competition strategies (Tremblay and Tremblay, 2019;Lee et al, 2020;Askar, 2021;Kopel and Putz, 2021).…”

Section: Introductionmentioning

confidence: 99%

Mixed competition and technology licensing in a supply chain

Zhang

Zhou

2022

Front. Psychol.

Self Cite

View full text Add to dashboard Cite

Technology licensing as a vital part of business behavior in many industries has drawn a fair amount of attention in industrial organization literature. Most existing literature on licensing decisions assumes that all firms engage in Cournot or Bertrand competition, while the type of mixed competition may affect the choice of the licensor. In this context, what decision will the licensor make faced with different mixed competitions? This paper studies the optimal technology licensing contract of a licensor firm engaging in different mixed competitions (Cournot-Bertrand or Bertrand-Cournot) with a potential licensee in a differentiated duopoly market considering one upstream firm (supplier) that provides key inputs. We find that if either the royalty or fixed-fee licensing is applied, the licensor favors royalty licensing under Bertrand-Cournot competition when the degree of substitution is small and prefers the fixed-fee licensing no matter under what kind of mixed competition as the degree of substitution increases. In the case of fixed-fee licensing, the result shows that the profits of licensors are the same under different types of mixed competition. Besides, fixed-fee licensing is not always the optimal choice for consumers, and they would prefer royalty licensing when the degree of substitution is very small.

show abstract

“…A variety of market structures, competitive models, and information structure models have all been used to study technology licensing approaches by scholars (Wang & Yang, 1999;Wang, 2002;Sen, 2005;Sen & Tauman, 2007;Sen & Bhattacharya, 2017;Niu, 2018;Jeon, 2019;Hattori & Tanaka, 2018, 2021. Other factors that influence the optimal licensing contract include product differentiation (Li & Wang, 2010;Ye & Mukhopadhyay, 2013;Rau et al, 2019;Zou & Chen, 2020;Sen et al, 2021;San Martín & Saracho, 2021), the number of participants (Antelo & Sampayo, 2017), and network effects (Zhao et al, 2014;Zhang et al, 2018). However, in the studies mentioned above, licensing of green technologies has received far less consideration than licensing for manufacturing technologies.…”

Section: Technology Licensingmentioning

confidence: 99%

Optimal Licensing Strategy of Green Technology With Corporate Social Responsibility

Shang

Chen

2022

Technological and Economic Development of Economy

View full text Add to dashboard Cite

This study investigates the green technology licensing strategies of firms with corporate social responsibility (CSR) in a duopoly market. The results show that in the absence of CSR, the optimal licensing contract is fixed-fee licensing for a patent holding firm. In the precent of CSR, the optimal licensing contract for a patent holding firm switches from fixed-fee licensing to royalty licensing with increasing level of CSR if the reduction cost of emissions is high. Moreover, we show that the profit goal of firm and the social welfare goal of government are not always mutually exclusive. If the level of CSR is low, a uniform licensing contract would be preferable. If the level of CSR is high, the optimal licensing contract is inconsistent. Finally, we show that CSR is not always beneficial to the social welfare while CSR benefits the environment. Social welfare benefits from increased CSR degree, but vice versa is true when CSR degree decreases. This research may provide valuable insights into licensing and CSR literature.

show abstract

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

Cited by 15 publications

References 30 publications

Technology Sharing and Competitiveness in a Stackelberg Model

Technology Sharing and Competitiveness in a Stackelberg Model

Mixed competition and technology licensing in a supply chain

Optimal Licensing Strategy of Green Technology With Corporate Social Responsibility

Contact Info

Product

Resources

About