The question of an optimal licensing contract in a leadership structure is studied when the patent holder is a non-producer and has three alternative licensing strategies, namely fixed fee, royalty and auction. Assuming once-for-all licensing contracts we show that royalty dominates other modes...

We study the question of optimal licensing contracts in a leadership structure and discuss the welfare implications. We assume that the size of the innovation is exogenous and the patent holder is a competitor in the product market. Then welfare depends on the types of contracts available and on...