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Shuji Takahashi
''Fixed Fee Licenses and Welfare Reducing Innovation: A Note''
( 2007, Vol. 15 No.13 )
This note shows that the fixed fee oligopolistic license model developed by Kamien and Tauman (1986) yields the result that the private returns from innovation can be greater than the social returns when the number of firms in the industry is equal to or larger than 3. This result implies that an innovation does not always improve welfare, even when it is profitable for the innovator. We also show that the auction license model yields the same result as the fixed fee.
JEL: O3 - Technological Change; Research and Development: General
L1 - Market Structure, Firm Strategy, and Market Performance: General
Manuscript Received : Mar 21 2007 Manuscript Accepted : Jul 20 2007

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