Journal article
Patent Licensing and Entry Deterrence: The Role of Low Royalties
Economica (London), v 82(s1), pp 1324-1348
01 Dec 2015
Featured in Collection : UN Sustainable Development Goals @ Drexel
Abstract
We study how an incumbent patent holder can use licensing strategically to reduce the threat of further entry, through a low royalty. This licensing strategy deters entry by making the terms of future licensing agreements less favourable to potential entrants. Strategic licensing induces a trade-off between a more concentrated market and a lower price. When this strategy is profitable for the patent holder, it is welfare enhancing if and only if the entry cost is high, or the efficiency edge of the technology is significant. Our analysis yields new policy implications (e.g. royalty floor) with respect to strategic licensing.
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Details
- Title
- Patent Licensing and Entry Deterrence: The Role of Low Royalties
- Creators
- Anne Duchene - IPAG Business SchoolDebapriya Sen - Ryerson UniversityKonstantinos Serfes - Drexel University
- Publication Details
- Economica (London), v 82(s1), pp 1324-1348
- Publisher
- Wiley
- Number of pages
- 25
- Grant note
- Faculty of Arts, Ryerson University
- Resource Type
- Journal article
- Language
- English
- Academic Unit
- Economics (School of Economics)
- Web of Science ID
- WOS:000368130900013
- Scopus ID
- 2-s2.0-84955356814
- Other Identifier
- 991019168177204721
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- Collaboration types
- Domestic collaboration
- International collaboration
- Web of Science research areas
- Economics