On Patent Licensing in Spatial Competition

11 Pages Posted: 20 Jun 2004

See all articles by Sougata Poddar

Sougata Poddar

National University of Singapore (NUS)

Uday Bhanu Sinha

Indian Statistical Institute

Abstract

We consider the optimal licensing strategy of an outsider patentee as well as an insider patentee in a linear city framework where firms compete in price. We show that offering royalty is best for an outsider patentee for both drastic and non-drastic innovations. For an insider patentee, offering no license is the best when the innovation is drastic, while royalty is optimal when the innovation is non-drastic. The incentive for innovation is higher for an outsider patentee compared to an insider patentee. The overall increase in welfare due to an innovation is the same for both outsider and insider patentees.

Suggested Citation

Poddar, Sougata and Sinha, Uday Bhanu, On Patent Licensing in Spatial Competition. Available at SSRN: https://ssrn.com/abstract=551181

Sougata Poddar (Contact Author)

National University of Singapore (NUS) ( email )

1E Kent Ridge Road
NUHS Tower Block Level 7
Singapore, 119228
Singapore

Uday Bhanu Sinha

Indian Statistical Institute ( email )

203 B. T. Road
Kolkata, West Bengal 700108
India

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