This paper shows the possibility of higher welfare under Cournot competitionin 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 Cournotcompetition compared to Bertrand...

Once a new technology has been invented, there is a credible threat of imitationwhen patents are long and imitation cost is low. When imitation is credible, the innovator hasan incentive to postpone technology adoption for relatively high cost of imitation. Thepossibility of licensing eliminates...

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