On the Number of Licenses with Signalling

26 Pages Posted: 4 Oct 2017

See all articles by Manel Antelo

Manel Antelo

Universidade de Santiago de Compostela - Faculty of Economic Science and Business Studies

Antonio Sampayo

Universidade de Santiago de Compostela

Date Written: December 2017

Abstract

We analyse a two‐period licensing game in which a non‐producing upstream patent holder licenses an innovation that lasts for two periods to either one or two downstream users. Licensing is made through a payment based on a two‐part tariff, namely a fixed fee plus a royalty per output unit. Regarding the innovation value when commercialized by each user (high or low), we compare a symmetric information context where such value is publicly known with a situation in which users have private information about the value, but with their period‐1 output signalling that value. We find that the patent holder is more likely to prefer to grant two licenses under signalling than under symmetric information, which highlights the benefits of resorting to market competition between users to reduce the amount of informational rents.

Suggested Citation

Antelo, Manel and Sampayo, Antonio, On the Number of Licenses with Signalling (December 2017). The Manchester School, Vol. 85, Issue 6, pp. 635-660, 2017, Available at SSRN: https://ssrn.com/abstract=3047544 or http://dx.doi.org/10.1111/manc.12157

Manel Antelo (Contact Author)

Universidade de Santiago de Compostela - Faculty of Economic Science and Business Studies ( email )

Avda. Juan XXIII s/n
Santiago, A Coruña 15704
Spain

Antonio Sampayo

Universidade de Santiago de Compostela ( email )

Fac. de CC. Economicas
Avda Burgo das Nacions s/n
15704 Santiago de Compostela, A Coruña 15782
Spain

HOME PAGE: http://sites.google.com/site/antoniorsampayo/

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