Patent Licensing under Financial Structure with Limited Liability

機構典藏 > College of Business and Management > Graduate Institute & Department of Industrial Economics > Journal Article > Item 987654321/108544

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Title:	Patent Licensing under Financial Structure with Limited Liability
Authors:	Wang, Kuang-Cheng Andy;Wang, Yi-Jie;Liang, Wen-Jung;Tsai, Ming-Che;Mai, Chao-Cheng
Keywords:	Leveraged firms;Limited liability;Outsider patentee;Cournot competition;Licensing means
Date:	2016-11-01
Issue Date:	2016-11-26 02:11:29 (UTC+8)
Publisher:	Elsevier BV
Abstract:	In a seminal paper, Kamien and Tauman (1986) show that fixedfee licensing is always superior to royalty licensing for the outsider licensor under Cournot competition. However, empirical studies demonstrate that royalty licensing is much more popular than fixed-fee licensing. We attempt to reconcile this controversy by taking into account the financial structure of firms with limited liability. We show that the optimal licensing contract under Cournot competition is royalty licensing if the mean-preserving variance of demand is large, while it is non-exclusive fixed-fee licensing otherwise. Moreover, this result is robust under mixed licensing contract and an oligopolistic market.
Relation:	International Review of Economics & Finance 46, pp.121-135
DOI:	10.1016/j.iref.2016.09.001
Appears in Collections:	[Graduate Institute & Department of Industrial Economics] Journal Article

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