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4 years ago

Innovative technology threatens market dominance, reshaping industry dynamics.

MPRA Paper
Royalty and license fee under oligopoly with or without entry of innovator: Two-step auction
Masahiko Hattori, Yasuhito Tanaka

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The article explores how a new technology can be licensed to existing companies in an industry, or the innovating firm can enter the market itself. The study looks at how license fees are determined in this scenario, considering the threat of the innovator entering the market. The innovating firm uses a two-step auction to sell licenses, combining a royalty per output with a fixed license fee.