ON LICENSING POLICIES IN BERTRAND COMPETITION

Three licensing policies, the auction, the fee, and the royalty, are studied in a Bertrand-type duopoly with differentiated goods. The analysis is conducted in terms of a multistage noncooperative game involving an external patentee and two firms each producing a differentiated good in Bertrand (price) competition. A principal finding is that for a patentee the royalty may be superior to the other two policies. Journal of Economic Literature Classification Numbers: 026, 611, 621. © 1993 Academic Press. All rights reserved.