RT Journal Article
SR 00
ID 10.1016/j.geb.2014.09.009
A1 Amir, Rabah
A1 Encaoua, David
A1 Lefouili, Yassine
T1 Optimal Licensing of Uncertain Patents in the Shadow of Litigation
JF Games and Economic Behavior
YR 2014
FD 2014-11
VO vol.88
SP 320
OP 338
K1 Licensing mechanisms
K1 Uncertain patents
K1 Patent litigation
K1 Cost comparative statics
AB This paper investigates the choice of a licensing mechanism by the holder of a patent whose validity is uncertain. We provide sufficient conditions of a general nature under which the licensor prefers to use a per-unit royalty contract. In particular we show that this is the case for the holders of weak patents if the strategic effect of an increase in a potential licensee's unit cost on the equilibrium industry profit is positive. The latter condition is shown to hold in a Cournot (resp. Bertrand) oligopoly with homogeneous (resp. differentiated) products under general assumptions on the demands faced by firms. As a byproduct of our analysis, we contribute to the literature on the cost paradox in oligopoly by offering some new insights of independent interest regarding the effects of cost variations on Cournot and Bertrand equilibria.
PB Elsevier
SN 0899-8256
LK https://publications.ut-capitole.fr/id/eprint/16643/
UL http://tse-fr.eu/pub/28822