We study the licensing incentives of an independent input producer owning a patented product innovation which allows the downstream rms to improve the quality of their nal goods. We consider a general two-part tari¤ contract for both outside and incumbent innovators. We nd that technology di¤usion critically depends on the nature of market competi- tion (Cournot vs. Bertrand). Moreover, the vertical merger with either downstream rm is always privately pro table and it is welfare improving for large innovations: this implies that not all pro table mergers should be rejected.
Filippini, L., Vergari, C., Product innovation in a vertically differentiated model, <<Product innovation in a vertically differentiated model>>, 2012; 2012 (833): 1-19 [http://hdl.handle.net/10807/10580]
Product innovation in a vertically differentiated model
Filippini, Luigi;
2012
Abstract
We study the licensing incentives of an independent input producer owning a patented product innovation which allows the downstream rms to improve the quality of their nal goods. We consider a general two-part tari¤ contract for both outside and incumbent innovators. We nd that technology di¤usion critically depends on the nature of market competi- tion (Cournot vs. Bertrand). Moreover, the vertical merger with either downstream rm is always privately pro table and it is welfare improving for large innovations: this implies that not all pro table mergers should be rejected.I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.