Technology Licensing in Multiple Markets

• Published in: Academia economic papers Vol. 41; no. 4; pp. 597 - 613
• Main Authors: 張瑞雲(Ray-Yun Chang), 黃鴻(Hong Hwang), 彭正浩(Cheng-Hau Peng)
• Format: Journal Article
• Language: English
• Published: Taipei 中央研究院經濟研究所 01.12.2013; The Institute of Economics, Academia Sinica; Institute of Economics, Academia Sinica
• Subjects: Analysis; Economic theory; Innovations; Laws, regulations and rules; Licenses; Licensing; Licensing agreements; Profits; Royalties; Studies; Tariffs; Technological change; Technology transfer; Two-part tariff licensing; 技術移轉; 兩部訂價授權; 多市場; Technology transfer; Multiple markets
• ISSN: 1018-161X; 1810-4851

Most studies which address licensing treat a licensor firm as either an insider or outsider. To integrate the two extreme cases, this paper sets up a model in which the licensee firm can produce two goods, one is homogeneous to and the other is horizontally differentiated from that produced by the licensor firm. The licensor firm licenses its superior technology to a licensee firm via a two-part tariff contract. It is found that if the innovation is non-drastic, the optimal licensing contract is composed of a pure royalty (two-part tariffs) if the innovation is small (large). On the other hand, with a drastic innovation, the licensor firm, contraposition to that in a single market case, definitely licenses its technology to its rival. Moreover, the royalty rate and the fixed fee in the optimal two-part tariff contract should both be positive.