Optimal Two-Part Tariff Licensing under Returns to Scale
Keywords:Patent Licensing, Royalty, Ad-valorem, two tarrif, Cournot Duopoly, Game Theory
In this study we investigate a two-part tariff licensing contract that enables an incumbent innovator to license a cost reducing innovation in a Cournot duopoly characterized by non-constant returns to scale. We identify the optimal two-part tariff licensing contract based on the cost reduction imposed by the use of the new technology and the market parameter.
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