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| Ryoko Oki |
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| ''Licensing Schemes in Endogenous Entry'' |
| ( 2010, Vol. 30 No.4 ) |
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| This paper examines the optimal licensing scheme when the number of licensees is determined endogenously. We demonstrate that a license holder obtains monopoly profit even if the license holder uses only a fixed fee as long as the marginal cost is constant. Furthermore, we show that under free entry of licensees, a license holder can obtain monopoly profit with any combination of a positive fixed fee and a unit royalty that satisfies a certain condition. Even if the fixed fee is regulated to be a certain level, a license holder can achieve monopoly profit by means of a unit royalty. This result is in contrast with that of a case where the number of licensees is exogenously determined. |
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| Keywords: license, endogenous entry |
JEL: D4 - Market Structure and Pricing: General
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| Manuscript Received : Sep 02 2010 | | Manuscript Accepted : Dec 02 2010 |
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