Optimal Licensing in a Stackelberg Duopoly Market under Asymmetric Information of the Marginal Cost

Qingyou Yan
2018 International Journal of Performability Engineering  
In this paper, we investigate a Stackelberg leader's licensing behavior and its welfare consequence when the rival holds private information about the marginal cost after licensing occurs. In order to examine the effect of the asymmetric information on the optimal licensing strategy, we consider three possible forms of a two-part tariff licensing contract (excluding excluding contract, separating contract, and pooling contract). The result shows that, the optimum is either an exclusive contract
more » ... exclusive contract with pure royalty on the low type rival or a separating contract with different royalty rates on the different type rivals, which mainly depends on the possibility that the rival is a low type. Furthermore, there is a conflict between the innovator and social welfare when the possibility that the rival is a low type is very high.
doi:10.23940/ijpe.18.02.p15.341348 fatcat:tnuzyhhb75ds5lpmr3uonikrx4