Business, Management and Accounting
7 years ago

Dynamic licensing boosts industry profits in face of fierce competition.

International Journal of Industrial Organization
Optimal licensing of technology in the face of (asymmetric) competition
Cuihong Fan, Byoung Heon Jun, Elmar Wolfstetter

Paper Summary

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The article explores how companies can make the most money by licensing their technology to competitors. It shows that when facing competition, the best pricing strategy changes. By using auctions and awarding multiple licenses, companies can increase their profits. The study also suggests that setting limits on royalty rates and fees can lead to higher industry profits. Additionally, the research finds that a similar strategy is beneficial for outside patent holders as well.