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Licensing
a new product: Fee vs. royalty licensing with unionized labor market |
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Arijit Mukherjee |
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Labor Economics, xxx (2009) xxx-xxx |
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In an economy with unionized labor market,
this paper show that the payoff of an outside innovator may be higher under
royalty licensing than under fixed-fee licensing and auction, if bargaining
power of the labor union is sufficiently high. This result holds for both
decentralized and centralized bargaining. It follows from our analysis that a
combination of fixed-fee and output royalty can be preferable to the
innovator compared to both royalty only licensing and auction (of fixed-fee
licensing). This paper also discuss the implications of positive opportunity
costs of the licensee. |
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