Monday, June 27, 2016

OPTIMAL VALUE OF A PATENT IN AN ASYMMETRIC COURNOT DUOPOLY MARKET

Uday Bhanu Sinha (Departments of Economics, Delhi School of Economics, University of Delhi, India) theorizes as to the OPTIMAL VALUE OF A PATENT IN AN ASYMMETRIC COURNOT DUOPOLY MARKET.

ABSTRACT: We consider a mechanism for optimizing the value of a patent owned by an independent patent holder who is not a producer in the market. We consider two kinds of cost reducing innovations: “common innovation” and “new technology innovation” in a homogeneous good Cournot market with ex-ante asymmetric costs of production. We show that the value of the patent is maximized when the patent holder sells the patent to the efficient firm at a fixed payment who would further license the innovation to its rival. This patent sale dominates all other licensing mechanisms for both kinds of innovations.

https://lawprofessors.typepad.com/antitrustprof_blog/2016/06/optimal-value-of-a-patent-in-an-asymmetric-cournot-duopoly-market.html

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