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Optimal Licensing with Asymmetric Cost-reducing |
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In this paper, we study licensing to a duopoly with
cost-reducing asymmetry. We find that, under
fixed-fee (royalty) licensing, the patent-holder may license her innovation
to the less-efficient (more-efficient) firm only if the relative
cost-reduction ratio is large (small) enough. In addition, we show that which
licensing method is superior to the others depends not only on whether the
license firm(s) can gain in efficiency post-licensing but also on whether the
patent-holder can authorize efficiently via the licensing method. |
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