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...

Purpose The purpose of this paper is to show that outsourcing can occur as outcome of a separating or pooling perfect Bayesian equilibrium although it is not profitable under complete information. Therefore, asymmetric information can itself be a reason for outsourcing....