Licensing of a drastic innovation with product differentiation
İnceoğlu, Fırat and Doğanoğlu, Uğur Toker (2010) Licensing of a drastic innovation with product differentiation. [Working Paper / Technical Report] Sabanci University ID:SU_FASS_2010/0005 AbstractWe analyze the licensing of a drastic innovation when products are differentiated due to consumer and/or product heterogeneity. We show that an industry insider prefers to divest its production arm and license the new technology as an industry outsider, in which case it can replicate multiproduct monopoly profits. We derive the optimal contracts and the optimal number of licenses by assuming a logit demand system. Optimal number of licenses, quite strikingly, increases when the technology has a higher relative value than a commercialized alternative. This result stands in sharp contrast with the literature on the licensing of a homogenous good. Available Versions of this Item- Licensing of a drastic innovation with product differentiation. (deposited 05 Oct 2010 09:28) [Currently Displayed]
Repository Staff Only: item control page
|