Licensing a new product with non-linear contracts |
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Authors: | Can Erutku Yves Richelle |
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Institution: | Economic Policy and Enforcement Branch, Competition Bureau; Département de science économique, Universitéde Montréal |
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Abstract: | Abstract . This paper looks at a situation where a licensor owns a patent on a technology that allows the production of a new good. The licensor seeks to license its innovation to a set of producers that differ according to their marginal cost of producing an existing good. We show that the licensor is able to obtain the profit a monopolist would achieve by producing the new good. The equilibrium licensing contract specifies both a fixed fee and a royalty scheme based on the production of a licensee. |
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Keywords: | D45 |
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