Monopolies Beware: Innovators Gain Upper Hand in Oligopolistic Markets
The article explores whether it is better for a new company with a cost-reducing technology to license it to existing companies or enter the market on its own in a three-firm industry. The researchers found that in a large market, it is best to license the technology to two existing companies without entering the market. However, in a smaller market, it may be better to license the technology to just one existing company, with or without entering the market.