TY - JOUR
T1 - Optimal license fees for a new product
AU - Kamien, Morton I.
AU - Tauman, Yair
AU - Zang, Israel
N1 - Funding Information:
* Research support by the Israel Institute gratefully acknowledged.
PY - 1988/8
Y1 - 1988/8
N2 - We compare how much profit an inventor of a patented new 'superior' product can realize by licensing its manufacture, for a fixed fee, to an oligopolistic industry producing an 'inferior' substitute. Our analysis is conducted in terms of a three stage noncooperative game involving n + 1 players: the inventor, acting as a Stackelberg leader, and the n firms. Analysis of subgame perfect equilibria in pure strategies of this game disclose the circumtances under which an inventor's optimal behavior ultimately leads to production of both products and when it allows for the production of the 'superior' product only. An extreme case of the latter possibility, namely when the 'superior' product is produced by a monopolist, is characterized also.
AB - We compare how much profit an inventor of a patented new 'superior' product can realize by licensing its manufacture, for a fixed fee, to an oligopolistic industry producing an 'inferior' substitute. Our analysis is conducted in terms of a three stage noncooperative game involving n + 1 players: the inventor, acting as a Stackelberg leader, and the n firms. Analysis of subgame perfect equilibria in pure strategies of this game disclose the circumtances under which an inventor's optimal behavior ultimately leads to production of both products and when it allows for the production of the 'superior' product only. An extreme case of the latter possibility, namely when the 'superior' product is produced by a monopolist, is characterized also.
KW - Noncooperative game
KW - product innovation
KW - subgame perfect equilibria
UR - http://www.scopus.com/inward/record.url?scp=38249028857&partnerID=8YFLogxK
U2 - 10.1016/0165-4896(88)90006-6
DO - 10.1016/0165-4896(88)90006-6
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AN - SCOPUS:38249028857
SN - 0165-4896
VL - 16
SP - 77
EP - 106
JO - Mathematical Social Sciences
JF - Mathematical Social Sciences
IS - 1
ER -