Licensing schemes in Stackelberg model under asymmetric information of product costs
Qing-you Yan - School of Business Administration, North China Electric Power University, Beijing 102206, P R, China (email)
Abstract: Based on the conclusion that have been put forward by Sougata Poddar and Uday Bhanu Sinha (2002), in "The Role of Fixed Fee and Royalty in Patent Licensing", we construct a model to analyze the behavior of the patentee when the licensee have private information about its marginal product costs before licensing. In the paper, the patentee is not considered as an independent R&D institute anymore but an insider. Moreover, we extend the model to Homogeneous Stackelberg and present the patentee's optimal linear licensing schemes in the sense of maximizing its profits under the licensing contract. It is found that the expected profit of the patentee under the separating contract is higher than any pooling contract in this model.
Keywords: Asymmetric Information, Homogeneous Stackelberg, Licensing.
Received: September 2006; Revised: April 2007; Published: October 2007.
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