Research output: Contribution to Journal/Magazine › Journal article › peer-review
Research output: Contribution to Journal/Magazine › Journal article › peer-review
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TY - JOUR
T1 - Patent licensing in a model of spatial price discrimination
AU - Heywood, John
AU - Ye, Guangliang
PY - 2011/8/1
Y1 - 2011/8/1
N2 - This paper demonstrates that it can be optimal for innovators that also produce to license via a fixed fee rather than a royalty in a model of spatial price discrimination. This reversal of the typical result emerges when reduced willingness to pay by consumers limits the competitive location advantage associated with differential production costs. Thus, in our duopoly model the innovator can earn more via the fixed fee than either no licensing or licensing by royalty, even though this requires accepting symmetric locations and the associated equality in production costs.
AB - This paper demonstrates that it can be optimal for innovators that also produce to license via a fixed fee rather than a royalty in a model of spatial price discrimination. This reversal of the typical result emerges when reduced willingness to pay by consumers limits the competitive location advantage associated with differential production costs. Thus, in our duopoly model the innovator can earn more via the fixed fee than either no licensing or licensing by royalty, even though this requires accepting symmetric locations and the associated equality in production costs.
KW - Licensing
KW - spatial price discrimination
KW - royalty
U2 - 10.1111/j.1435-5957.2010.00338.x
DO - 10.1111/j.1435-5957.2010.00338.x
M3 - Journal article
VL - 90
SP - 589
EP - 602
JO - Papers in Regional Science
JF - Papers in Regional Science
SN - 1056-8190
IS - 3
ER -