Date of This Version
10-20-2020
Abstract
In a context of product innovation, we study two-part tariff licensing between a patentee and a potential rival which compete in a differentiated product market characterized by network externalities. The latter are shown to crucially affect the relative profitability of Cournot vs. Bertrand when a per unit royalty is applied. By contrast, we find that Cournot yields higher profits than Bertrand under ad valorem royalties, regardless of the strength of network effects.
Recommended Citation
Montinaro, Marta; Pal, Rupayan; and Scrimitore, Marcella, "Per Unit and Ad Valorem Royalties in a Patent Licensing Game" (October 20, 2020). Fondazione Eni Enrico Mattei Working Papers. Paper 1302.
https://services.bepress.com/feem/paper1302
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