In industries where a patent system is in place, licensing agreements among competing firms often create distortions, as they involve royalties. Royalties are generally considered to be anti-competitive as they raise market prices and reduce consumer welfare. In this paper we propose simple tax...

We consider a homogenous good Cournot duopoly, in which a firm owns acost-reducing technology and has a non-controlling share over its rival. Weshow that partial passive ownership holdings may induce licensing via afixed fee and increase consumer surplus, tax revenues, and social...