The Optimal Licensing Contract in a Differentiated Stackelberg Model
This paper extends the work of Wang (2002) by considering a differentiated Stackelberg model, when the leader firm is an inside innovator and licenses its new technology by three options, that is, fixed-fee licensing, royalty licensing, and two-part tariff licensing. The main contributions and concl...
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| Format: | Article |
| Language: | English |
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Wiley
2014-01-01
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| Series: | The Scientific World Journal |
| Online Access: | http://dx.doi.org/10.1155/2014/437919 |
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| author | Xianpei Hong Lijun Yang Huaige Zhang Dan Zhao |
| author_facet | Xianpei Hong Lijun Yang Huaige Zhang Dan Zhao |
| author_sort | Xianpei Hong |
| collection | DOAJ |
| description | This paper extends the work of Wang (2002) by considering a differentiated Stackelberg model, when the leader firm is an inside innovator and licenses its new technology by three options, that is, fixed-fee licensing, royalty licensing, and two-part tariff licensing. The main contributions and conclusions of this paper are threefold. First of all, this paper derives a very different result from Wang (2002). We show that, with a nondrastic innovation, royalty licensing is always better than fixed-fee licensing for the innovator; with a drastic innovation, royalty licensing is superior to fixed-fee licensing for small values of substitution coefficient d; however when d becomes closer to 1, neither fee nor royalty licensing will occur. Secondly, this paper shows that the innovator is always better off in case of two-part tariff licensing than fixed-fee licensing no matter what the innovation size is. Thirdly, the innovator always prefers to license its nondrastic innovation by means of a two-part tariff instead of licensing by means of a royalty; however, with a drastic innovation, the optimal licensing strategy can be either a two-part tariff or a royalty, depending upon the differentiation of the goods. |
| format | Article |
| id | doaj-art-73a00fe00d444125a32aaf4e937dd4d8 |
| institution | Kabale University |
| issn | 2356-6140 1537-744X |
| language | English |
| publishDate | 2014-01-01 |
| publisher | Wiley |
| record_format | Article |
| series | The Scientific World Journal |
| spelling | doaj-art-73a00fe00d444125a32aaf4e937dd4d82025-02-03T05:52:09ZengWileyThe Scientific World Journal2356-61401537-744X2014-01-01201410.1155/2014/437919437919The Optimal Licensing Contract in a Differentiated Stackelberg ModelXianpei Hong0Lijun Yang1Huaige Zhang2Dan Zhao3School of Economics and Management, Hubei University of Automotive Technology, Shiyan 442002, ChinaSchool of Economics and Management, Hubei University of Automotive Technology, Shiyan 442002, ChinaSchool of Economics and Management, Hubei University of Automotive Technology, Shiyan 442002, ChinaAntai College of Economics & Management, Shanghai Jiao Tong University, Shanghai 200052, ChinaThis paper extends the work of Wang (2002) by considering a differentiated Stackelberg model, when the leader firm is an inside innovator and licenses its new technology by three options, that is, fixed-fee licensing, royalty licensing, and two-part tariff licensing. The main contributions and conclusions of this paper are threefold. First of all, this paper derives a very different result from Wang (2002). We show that, with a nondrastic innovation, royalty licensing is always better than fixed-fee licensing for the innovator; with a drastic innovation, royalty licensing is superior to fixed-fee licensing for small values of substitution coefficient d; however when d becomes closer to 1, neither fee nor royalty licensing will occur. Secondly, this paper shows that the innovator is always better off in case of two-part tariff licensing than fixed-fee licensing no matter what the innovation size is. Thirdly, the innovator always prefers to license its nondrastic innovation by means of a two-part tariff instead of licensing by means of a royalty; however, with a drastic innovation, the optimal licensing strategy can be either a two-part tariff or a royalty, depending upon the differentiation of the goods.http://dx.doi.org/10.1155/2014/437919 |
| spellingShingle | Xianpei Hong Lijun Yang Huaige Zhang Dan Zhao The Optimal Licensing Contract in a Differentiated Stackelberg Model The Scientific World Journal |
| title | The Optimal Licensing Contract in a Differentiated Stackelberg Model |
| title_full | The Optimal Licensing Contract in a Differentiated Stackelberg Model |
| title_fullStr | The Optimal Licensing Contract in a Differentiated Stackelberg Model |
| title_full_unstemmed | The Optimal Licensing Contract in a Differentiated Stackelberg Model |
| title_short | The Optimal Licensing Contract in a Differentiated Stackelberg Model |
| title_sort | optimal licensing contract in a differentiated stackelberg model |
| url | http://dx.doi.org/10.1155/2014/437919 |
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