Technology transfer in duopoly The role of cost asymmetry

This article examines the possibility of a profitable technology transfer deal in a duopoly. We show that under a fixed fee contract, technology transfer will be always profitable if the products are sufficiently differentiated or the firms behave sufficiently cooperatively or both. Under a profit sharing contract, however, a profitable technology transfer deal always exists even in a market characterised by Cournot duopoly with homogeneous goods.