Taking technological differences between firms as given, we show that the technologically advanced firm has a stronger incentive for technology licensing under a decentralized unionization structure than with centralized wage setting. Furthermore, We show that, in presence of licensing, the...

It is believed that market power of the input supplier, charging a linear price, is detrimental for the consumers since it creates the double marginalisation problem. We show that this view may not be true if the final goods producers can adopt strategies to reduce rent extraction by the input...

This paper challenges the conventional wisdom that exclusive owners of an advanced technology are always better off when producing as a monopolist than when competing against another firm. Competition against a less efficient firm weakens the power that a host country can exert on the incumbent...

This paper shows the possibility of higher welfare under Cournot competition in an asymmetric cost duopoly when the firms have the option for technology licensing. We find that if there is licensing with up-front fixed-fee, welfare is higher under Cournot competition compared to Bertrand...

The literature on technology licensing has ignored the importance of market power of the input supplier. In this paper we examine the incentive for licensing in the downstream industry when the firms in the upstream industry have market power. We show that licensing in the downstream industry is...

We show that the common wisdom suggesting higher investment in innovation under a stronger patent protection may not be true if the innovator can license its technology ex‐post innovation. If the initial cost of production is high and the slope of the marginal cost of undertaking innovation is...

The theoretical literature on industrial organization has been argued that firms hold excess capacity to deter entry. However, empirical analysis did not provide much support to this hypothesis. In this paper we show that the dominant firms may hold excess capacity not for entry deterrence but...

This paper investigates the effect of different patent regimes on R&D investment and social welfare in a duopoly market with uncertain R&D process. We find that strong patent protection increases R&D investment of at least one firm but whether both firms' R&D investment will be more under strong...

The previous contributions on research and development (R&D) have generally ignored the role of other business strategies such as licensing between the firms doing R&D. This paper examines how the option for licensing affects R&D organization and social welfare. We find that if cost reduction...

Recent evidences show the co-existence of lower trade cost and higher amount of foreign direct investment (FDI), which cannot be explained by the traditional "proximity-concentration trade-off". We show that if both the home and the host country markets are important to the foreign firm, lower...