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Neelanjan Sen
''"Unilateral" technology licensing from an entrant to incumbent monopolist''
( 2014, Vol. 34 No.2 )
An incumbent monopolist, tries to deter entry and thus never licenses its technology to any potential entrant. This paper, however shows that the monopolist may license in the technology of the entrant that remains out of the market in the pre-licensing stage. Post-licensing, the entrant actually enters the market, but this reduction in the market share of the incumbent, (paradoxically) increases its post-entry profit. Moreover the entrant can actually subsidize the monopolist to license its technology. Licensing decreases welfare if the monopolist is either a foreign firm (whose profit is totally repatriated) or a domestic firm.
Keywords: Technology licensing; Oligopoly; Fixed-cost
JEL: L2 - Firm Objectives, Organization, and Behavior: General
L1 - Market Structure, Firm Strategy, and Market Performance: General
Manuscript Received : Feb 28 2014 Manuscript Accepted : May 11 2014

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