Delays in Patent Licensing under Asymmetric Information

In this paper, we explain delays in patent licensing, and propose a solution to eliminate the delays. Licensing promotes technology transfer, but some empirical studies point out that delay in a license agreement exists, and this delay then pushes back the release of new products with patented technologies. There are many theoretical papers in the literature on licensing, but they mainly focus on a cost-reducing patent and the optimal licensing structure. To analyze the delay, we consider a two-period model with information asymmetry between a potential licensee and a patentee who has a patent for a new product. It is shown that under certain conditions the patentee proposes a gambling fee in the first period, and the gambling fee can be rejected depending on the market scale, leading to delays in licensing. Moreover, to eliminate the delays, we evaluate the effectiveness of utilizing the average of past license fees, through simulation experiments