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Competition and Welfare: The Implications of Licensing

 

Arjit  Mukherjee

The Manchester

School (2010)

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In this paper, we show that welfare may be higher under Cournot competition than under Bertrand competition.

Under fixed-fee licensing, consumer surplus and welfare are higher under Cournot competition if the technological difference between the firm is moderate.

Under royalty licensing, if the bargaining power of the licenser is not very high and the technological difference between the firm is large, consumer surplus and welfare are higher under Cournot competition.

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