Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/75533 
Authors: 
Year of Publication: 
1999
Series/Report no.: 
CESifo Working Paper No. 188
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
This paper develops an incomplete contract model of the licensing relationship to analyze the dynamic effects of licensing on R&D competition in the innovation market and to examine the rationale for often observed grant-back clauses. Of particular concern are how the consideration of future competition distorts the licensing relationship and how the grant-back clause can mitigate this distortion. I also evaluate the validity of the casual antitrust argument that grant-back clauses may adversely affect competition because they reduce the licensee's incentive to engage in R&D and thereby limit rivalry in innovation markets.
Document Type: 
Working Paper
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