In this Note we consider an economy composed by two firms; a leader and a follower, that invest in R&D for process innovations. Competition to innovate is usually modelled as a two stage game. In the first stage of the game both firms simultaneously reduces their production costs. In the second stage the firms compete à la Stackelberg and it is possible to prove that the profits of one of the two firms (and total profits) might decrease in a range of parameters. Then we consider the possibility of technology transfer from the leader that has the most productive technology to the follower under licensing by means of a fixed fee and of a royalty. It is possible to prove that under licensing total profits will increase in some range of parameters above mentioned in comparison to the pre-innovation case.

Filippini, L., Cost reduction, licensing and incentive to innovate: a note, <<ECONOMICS OF INNOVATION AND NEW TECHNOLOGY>>, 2002; 2002 (1): 51-59 [http://hdl.handle.net/10807/1850]

Cost reduction, licensing and incentive to innovate: a note

Filippini
2002

Abstract

In this Note we consider an economy composed by two firms; a leader and a follower, that invest in R&D for process innovations. Competition to innovate is usually modelled as a two stage game. In the first stage of the game both firms simultaneously reduces their production costs. In the second stage the firms compete à la Stackelberg and it is possible to prove that the profits of one of the two firms (and total profits) might decrease in a range of parameters. Then we consider the possibility of technology transfer from the leader that has the most productive technology to the follower under licensing by means of a fixed fee and of a royalty. It is possible to prove that under licensing total profits will increase in some range of parameters above mentioned in comparison to the pre-innovation case.
Inglese
Filippini, L., Cost reduction, licensing and incentive to innovate: a note, <<ECONOMICS OF INNOVATION AND NEW TECHNOLOGY>>, 2002; 2002 (1): 51-59 [http://hdl.handle.net/10807/1850]
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/10807/1850
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