License Expenditures of Incumbents and Potential Entrants: An Empirical Analysis of Firm Behavior

28 Pages Posted: 1 Jun 2005 Last revised: 21 Feb 2015

See all articles by Dirk Czarnitzki

Dirk Czarnitzki

Centre for European Economic Research (ZEW); Catholic University of Leuven (KUL)

Kornelius Kraft

University of Dortmund - Department of Economics; IZA Institute of Labor Economics

Date Written: 2005

Abstract

This paper presents the results of an empirical test concerning the auction model of Gilbert and Newbery (1982). The study uses data on German companies in order to analyze expenditures for technology licenses. Aside of standard control variables the motives for innovation expenditures are also taken into account. We differentiate between firms which intend to secure their present position in the market (incumbents) and those intending to enter a new market (challengers). In line with the prediction of the auction model, it turns out that incumbents show higher expenditures for technology licenses than potential entrants.

Keywords: Innovation, Licenses, Incumbent versus entrant, Limited Dependent Variables

JEL Classification: L12, O31, O32

Suggested Citation

Czarnitzki, Dirk and Kraft, Kornelius, License Expenditures of Incumbents and Potential Entrants: An Empirical Analysis of Firm Behavior (2005). ZEW - Centre for European Economic Research Discussion Paper No. 05-035, Available at SSRN: https://ssrn.com/abstract=732303 or http://dx.doi.org/10.2139/ssrn.732303

Dirk Czarnitzki (Contact Author)

Centre for European Economic Research (ZEW) ( email )

P.O. Box 10 34 43
Mannheim, 68034
Germany

Catholic University of Leuven (KUL) ( email )

Faculty of Economics and Business
Naamsestraat 69
Leuven, 3000
Belgium
+32 16 326906 (Phone)
+32 16 325799 (Fax)

HOME PAGE: http://www.econ.kuleuven.be/msi/faculty_members.htm

Kornelius Kraft

University of Dortmund - Department of Economics ( email )

D-44221 Dortmund
Germany
+49 231 755-3152 (Phone)
+49 231 755-3155 (Fax)

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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