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Optimal licensing policy under vertical product differentiation
journal contribution
posted on 2017-01-01, 00:00 authored by Xuan NguyenXuan Nguyen, Pasquale Sgro, Munirul NabinMunirul NabinThis paper explores a vertical product differentiation model with a licensing arrangement between a multinational firm with superior technology and a domestic firm with obsolete technology. We find that a subsidy provided by the domestic country's government to the domestic firm to assist with the licensing arrangement is welfare enhancing for the domestic country. Furthermore, both the multinational firm and the domestic country are better off under royalty than under fixed fee licensing. These findings stand in contrast to earlier results in the literature.
History
Journal
Review of development economicsVolume
21Issue
3Pagination
497 - 510Publisher
WileyLocation
London, Eng.Publisher DOI
ISSN
1467-9361eISSN
1467-9361Language
engPublication classification
C Journal article; C1 Refereed article in a scholarly journalCopyright notice
2016, WileyUsage metrics
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