Domestic patenting systems and foreign licensing choices

Tsai, Yingyi and Mukherjee, Arijit (2017) Domestic patenting systems and foreign licensing choices. Journal of Economics . ISSN 1617-7134

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Abstract

This paper examines a foreign technology holder’s licensing choices between royalty and fixed-fee scheme. We emphasize that foreign licensor chooses the quality of licensed technology when the licensee country does not implement perfect intellectual property protection for licensor’s technology. We study quality choice as the foreign licensor’s selection for a particular grade of technical skills. We show that fixed fee emerges as the equilibrium licensing scheme when both the transfer of his technology is relatively efficient and the licensee is sufficiently cost competitive in the domestic market, and that royalty licensing prevails otherwise. We further show it need not hold the general belief that welfare in the licensor country unambiguously rise with a stronger patenting system in the licensee country when, in particular, such patenting system in place is sufficiently lax.

Item Type: Article
Additional Information: The final publication is available at Springer via http://dx.doi.org/10.1007/s00712-017-0523-y.
Keywords: Intellectual Property Protection; Licensing; Quality of the licensed technology; Welfare
Schools/Departments: University of Nottingham, UK > Faculty of Social Sciences > Nottingham University Business School
Identification Number: https://doi.org/10.1007/s00712-017-0523-y
Depositing User: Howis, Jennifer
Date Deposited: 14 Feb 2017 10:08
Last Modified: 14 Feb 2017 10:13
URI: http://eprints.nottingham.ac.uk/id/eprint/40455

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