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Competition in Licensing

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Yair Tauman and Ming-hungWeng

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Working Paper

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Ming-hungWeng

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We analyze the licensing strategies of innovators who compete to license their substitution inventions. If inventors face deterministic competition, they collectively will induce a perfect diffusion of the new technology even when the innovation is drastic. If a subsequent substitution invention is probable, the early inventor of a drastic innovation will also license the whole industry when the probability facing a potential competition is very high.

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