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Optimal
Licensing Policy in Differentiated Industries |
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THE ECONOMIC RECORD, 81, 2005, 51¡V64. |
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This paper analyses the
policy implications of licensing between producers of differentiated goods.
We consider and compare two-part tariff, fixed fee royalty and collusive
licensing contracts. Under the optimal licensing policy, there will be no
technology transfers if the innovation size is sufficiently small and degree
of product differentiation is sufficiently low. Licensing deals that involve
drastic innovations are always socially desirable. In the limit, as product
differentiation converges to zero, it becomes socially desirable to transfer
drastic innovations only. The range of innovation sizes that is
socially optimal to transfer increases as product differentiation increases. |
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