Licensing and Technology Transfer
Pew Studies in Economics and Security, Incentives in Procurement Contracting, Jim Leitzel and Jean Tirole, Eds., Westview Press, 1993
Posted: 21 Feb 2014
Date Written: January 1, 1993
Government mandated technology transfers from the developer of a product to a second source offer a potential gain of reduced information rents and procurement costs, even when such transfers are otherwise inefficient. This paper models the tradeoff between information extraction and inefficient transfers in the context of an optimally-designed procurement auction in which an incumbent supplier bids against a potential second-source firm. In the optimal auction, the incumbent firm is given stronger incentives to bid aggressively by transferring technology when the bids from the competing firms are close and the transfer is not otherwise too inefficient.
Keywords: Contract theory, Incentives
JEL Classification: C70, D82
Suggested Citation: Suggested Citation