Journal article
Optimal patent licensing-Two or three-part tariff
Journal of public economic theory, Vol.25(3), pp.624-648
06/2023
DOI: 10.1111/jpet.12630
Abstract
We look into technology transfer by an insider patentee in a spatial duopoly model under three types of licensing contracts-(i) two-part tariff with fixed fee and per-unit royalty, (ii) two-part tariff with fixed fee and ad-valorem royalty and (iii) general three-part tariff with fixed fee, per-unit and ad-valorem royalties. Under two-part tariff contracts, the licenser is better off with the per-unit royalty contract but the general contract does better than the other contracts. In contrast to the existing literature, all three licensing contracts may make the consumers worse-off compared to no licensing, with the lowest consumer surplus achieved under the general licensing contract. Welfare under the general licensing contract is equal to the welfare under two-part tariff with ad-valorem royalty and it is higher than the welfare under no licensing but lower than the welfare under two-part tariff with per-unit royalty. Hence, the general three-part licensing contract is privately optimal but not socially optimal. Similar conclusions hold also under a nonspatial linear demand model with differentiated products.
Details
- Title: Subtitle
- Optimal patent licensing-Two or three-part tariff
- Creators
- Swapnendu Banerjee - Jadavpur UniversityArijit Mukherjee - University of NottinghamSougata Poddar - Chapman University
- Resource Type
- Journal article
- Publication Details
- Journal of public economic theory, Vol.25(3), pp.624-648
- DOI
- 10.1111/jpet.12630
- ISSN
- 1097-3923
- eISSN
- 1467-9779
- Publisher
- Wiley
- Number of pages
- 25
- Language
- English
- Date published
- 06/2023
- Academic Unit
- Economics
- Record Identifier
- 9984963152702771
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