Kishimoto, Shin; Muto, Shigeo Fee versus royalty policy in licensing through bargaining: an application of the Nash bargaining solution. (English) Zbl 1254.91230 Bull. Econ. Res. 64, No. 2, 293-304 (2012). Summary: We consider a Cournot duopoly market in which the patent-holding firm negotiates with its rival firm about payments for licensing a cost-reducing innovation. Applying the Nash bargaining solution, we compare two licensing policies, a fixed fee and a royalty. Our results are as follows. Royalty licensing is better than fixed fee licensing for both firms if the innovation is not drastic. So, royalty licensing is always carried out. Moreover, though there exists a case in which consumers prefer fixed fee licensing, royalty licensing is always superior to fixed fee licensing from the social point of view. Cited in 2 Documents MSC: 91B26 Auctions, bargaining, bidding and selling, and other market models 91B54 Special types of economic markets (including Cournot, Bertrand) Keywords:Cournot duopoly market; fee licensing; Nash bargaining solution; royalty licensing PDF BibTeX XML Cite \textit{S. Kishimoto} and \textit{S. Muto}, Bull. Econ. Res. 64, No. 2, 293--304 (2012; Zbl 1254.91230) Full Text: DOI References: [1] Arrow, The Rate and Direction of Inventive Activity: Economic and Social Factors pp 609– (1962) [2] Kamien, The private value of a patent: a game theoretic analysis, Journal of Economics (Supplement) 4 pp 93– (1984) [3] Kamien, Fees versus royalties and the private value of a patent, Quarterly Journal of Economics 101 pp 471– (1986) [4] Kamien, Patent licensing: the inside story, The Manchester School 70 pp 7– (2002) [5] Nash, The bargaining problem, Econometrica 18 pp 155– (1950) · Zbl 1202.91122 [6] Rubinstein, Perfect equilibrium in a bargaining model, Econometrica 50 pp 97– (1982) · Zbl 0474.90092 [7] Sen, General licensing schemes for a cost-reducing innovation, Games and Economic Behavior 59 pp 163– (2007) · Zbl 1271.91065 [8] Tauman, The Shapley value of a patent licensing game: the asymptotic equivalence to non-cooperative results, Economic Theory 30 pp 135– (2007) · Zbl 1172.91306 [9] Wang, Fee versus royalty licensing in a Cournot duopoly model, Economics Letters 60 pp 55– (1998) · Zbl 0914.90033 [10] Watanabe, Stable profit sharing in patent licensing: general bargaining outcomes, International Journal of Game Theory 37 pp 505– (2008) · Zbl 1155.91014 This reference list is based on information provided by the publisher or from digital mathematics libraries. Its items are heuristically matched to zbMATH identifiers and may contain data conversion errors. It attempts to reflect the references listed in the original paper as accurately as possible without claiming the completeness or perfect precision of the matching.