Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/155558
Authors: 
Bakaouka, Elpiniki
Milliou, Chrysovalantou
Year of Publication: 
2017
Series/Report no.: 
CESifo Working Paper 6316
Abstract: 
We explore the incentives of a vertically integrated incumbent firm to license the production technology of its core input to an external firm, transforming the licensee into its input supplier. We find that the incumbent opts for licensing even when licensing also transforms the licensee into one of its direct competitors in the final products market. In fact, the licensee's entry into the final products market, although increases the competition and the cost that the licensor faces, it reinforces, instead of weakens, the licensing incentives. Furthermore, the licensee's entry augments the positive welfare implications of vertical licensing.
Subjects: 
licensing
vertical relations
entry
two-part tariffs
outsourcing
JEL: 
L22
L24
L13
L42
D45
Document Type: 
Working Paper

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