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Title:Licensing technology and foreclosure in contests PDF Logo
Authors:Clark, Derek
Foros, Øystein
Sand, Jan Yngve
Issue Date:2008
Series/Report no.:Manchester Business School working paper 545
Abstract:We consider an industry where one firm with a superior technology competes for market shares with several rivals. The owner of the superior technology (the dominant firm) can license or transfer the source of its dominance to a subset of rivals. Allowing the non-license takers to remain active in the market is a drain on the profit of the insiders, and we demonstrate that the dominant firm will only make a transfer of the superior technology if it can be used to foreclose some rival firms. Foreclosure of a subset of firms may thus be the outcome even without restrictions on the licensing schemes. Moreover, we show that when licensing is profitable, the dominant firm will prefer a complete transfer even if a partial transfer can be made.
Subjects:licensing
foreclosure
contest
JEL:D21
L24
Document Type:Working Paper
Appears in Collections:Manchester Business School Working Paper Series, The University of Manchester

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