Licensing endogenous cost-reduction in a differentiated Stackelberg model

► We study pre-licensing and licensing contracts in a differentiated Stackelberg model. ► We do a direct comparison between our Stackelberg duopoly model and the Cournot duopoly model studied by Li and Ji (2010). ► We conclude that the degree of the differentiation of the goods represents a great im...

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Bibliographic Details
Published in:Communications in nonlinear science & numerical simulation 2013-02, Vol.18 (2), p.308-315
Main Authors: Ferreira, Flávio, Bode, Oana R.
Format: Article
Language:English
Subjects:
Computer simulation
Differentiation
Game theory
Industrial organization
Licensing
Mathematical models
Nonlinearity
Optimization
R&D investments
Stackelberg model
Tariffs
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Summary:► We study pre-licensing and licensing contracts in a differentiated Stackelberg model. ► We do a direct comparison between our Stackelberg duopoly model and the Cournot duopoly model studied by Li and Ji (2010). ► We conclude that the degree of the differentiation of the goods represents a great importance in the results. In this paper we consider a differentiated Stackelberg model, when the leader firm engages in an R&D process that gives an endogenous cost-reducing innovation. The aim is to study the licensing of the cost-reduction by a two-part tariff. By using comparative static analysis, we conclude that the degree of the differentiation of the goods plays an important role in the results. We also do a direct comparison between our model and Cournot duopoly model.
ISSN:1007-5704
1878-7274
DOI:10.1016/j.cnsns.2012.07.001