Technology licensing strategy for network product in a service industry
Summary: Technology licensing has gained significant attention in literature and practice as a rapid and effective way to improve firm's capability of technology innovation. In this paper, we investigate a duopolistic service provider competition market, where service providers develop and sell a kind of network product. In this setting, we analyze the innovating service provider's four licensing strategies: no licensing, fixed fee licensing, royalty licensing, and two-part tariff licensing. The literature suggests that when the network products can be completely substituted, two-part tariff licensing is the optimal strategy of the innovating service provider. We find that when the network products cannot be completely substituted, two-part tariff licensing is not always optimal. The degree of the product differentiation, the intensity of the network effects, and the R\&D cost of the potential licensee play a key role in determining the innovating service provider's optimal licensing strategies.
- Licensing strategies in a differentiated Cournot oligopoly
- Price competition and technology licensing in a dynamic duopoly
- Technology licensing under optimal tax policy
- Licensing to a competitor and strategic royalty choice in a dynamic duopoly
- Patent strength and optimal two-part tariff licensing with a potential rival
- Involuntary Unemployment as a Perfect Equilibrium in a Bargaining Model
- Licensing of a quality-improving innovation
- Milestone Payments or Royalties? Contract Design for R&D Licensing
- Natural Oligopolies
- On advertising games and spillover in service systems
- On licensing policies in Bertrand competition
- Optimal licensing of cost-reducing innovation
- Relaxing Price Competition Through Product Differentiation
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