a dynamic analysis of licensing the boomerang effect and grant back clauses this article develops an incomplete contract model of the licensing relationship to analyze the dynamic effects of licensing on r d competition in the innovation market and to examine the rationale for often observed grant back clauses of particular concern are how the consideration of future competition distorts the licensing relationship and how the grant back clause can mitigate this distortion i also evaluate the validity of the casual antitrust argument that grant back clauses may adversely affect competition because they reduce the licensee s incentive to engage in r d and thereby limit rivalry in innovation markets

the structure of licensing contracts industrial organization theory has explored several issues related to licensing but empirical analyses are extremely rare we amass a new and detailed dataset on licensing contracts and use it to present some simple facts concerning licensing behavior our analysis reveals robust cross industries differences in several contractual features such as exclusivity cross licensing ex ante versus ex post technology transfers and licensing to related versus unrelated parties we offer an interpretation of these facts based on cross industry variation in the strength of intellectual property rights

vacancies unemployment and the phillips curve abstract the canonical new keynesian phillips curve has become a standard component of models designed for monetary policy analysis however in the basic new keynesian model there is no unemployment all variation in labor input occurs along the intensive hours margin and the driving variable for inflation depends on workers marginal rates of substitution between leisure and consumption in this paper we incorporate a theory of unemployment into the new keynesian theory of inflation and empirically test its implications for inflation dynamics we show how a traditional phillips curve linking inflation and unemployment can be derived and how the elasticity of inflation with respect to unemployment depends on structural characteristics of the labor market such as the matching technology that pairs vacancies with unemployed workers we estimate on us data the phillips curve generated by the model while we can reject the baseline new keynesian phillips curve in favor of the search frictions specification we show it is still too stylized to fully describe the dynamics of firms marginal costs

labor market and financial shocks a time varying analysis motivated by the events of the great recession we estimate a time varying structural var model to analyze the effects of a financial shock on the labor market focusing on the us our results indicate that a tightening of financial conditions is highly detrimental to the labor market moreover we show that financial shocks have affected the unemployment rate asymmetrically in the last three decades an implication that a standard var cannot capture while negative financial shocks have been responsible for increases in unemployment our model does not find significant contributions of financial shocks during periods of expansion the source of this asymmetry is the time varying standard deviation of the identified shock which is higher in times of financial distress on the other hand we find the transmission mechanism is almost constant over time

royalties vs fees how do firms pay for foreign technology abstract the theoretical determinants of technology licensing contracts have been extensively studied but empirical evidence is scarce we assemble a data set of all the foreign technology licensing agreements entered into by manufacturing firms in india between 1989 and 1993 industry firm and contract characteristics are used to explain differences between the forms of payment in licensing contracts our findings support theoretical arguments licensing contracts are more likely to use royalties when sales are relatively high while increased volatility of sales and greater profitability favor fixed fee contracts we also find that firms are more likely to use output based payments to control the sale and diffusion of r d or brand intensive know how to unaffiliated firms

durable goods monopolists durable goods monopolists face special problems because the sale of their products creates a secondhand market not controlled by the monopolist to the extent the monopolist is able to rent his product rather than sell it or to make binding promises about his future production such problems are ameliorated given the inability to do the above the monopolist is led to producing goods less durable than those produced by either competitive firms or monopolist returns a reverse averch johnson result that monopolist sellers may invest less in fixed costs including plant modernization and research and development than would the renters is shown it is also shown that even though sellers have less monopoly power than renters and nondurable goods monopolists it is possible that the seller will cause a greater deadweight loss than the other types of monopolies

the licensing of patents under asymmetric information abstract this paper seeks to explain the use of royalty payments rather than fixed fees in the licensing of patents by the presence of asymmetric information the licensee is assumed to know the value of the patent and makes a single offer of a contract to the licensor it is shown that there is a unique equillibrium satisfying cho and kreps intuitive criterion qualitative properties of the equilibrium contract are derived by considering a continuum of types

welfare cost of fluctuations when labor market search interacts with financial frictions we provide a quantitative assessment of welfare costs of fluctuations in a search model with financial frictions the matching process in the labor market leads positive shocks to reduce unemployment less than negative shocks increase it we show that the magnitude of this non linearity is magnified frictions this asymmetric effect of the business cycle leads to sizable welfare costs the model also accounts for the responsiveness of the job finding rate to the business cycle as financial frictions endogenously generate counter cyclical opportunity costs of opening a vacancy and wage sluggishness

market socialism the current debate with the decline of command economies in eastern europe china and elsewhere the systemic issue of the feasability of combining the market mechanism with some form of public or collective ownership or control over the distribution of surplus has assumed topical importance the essays in this book aim at advancing the old debate on this issue to a new analytical stage questions of incentive compatability agency problems depoliticization of economic decisions and those of justice and worker autonomy are at the heart of the discussion the defenders as well as critics of market socialist proposals in this book are particularly sensitive to the centrality of these questions

how do competitive pressures affect incentives to innovate when there is a market for inventions competition and intellectual property ip protections are complements in stimulating innovation when ip is appropriable a market for inventions forms and competitive pressures increase incentives to innovate competition among producers the demand side of the market for inventions and competition among inventors the supply side of the market for inventions create incentives to innovate when ip is not fully appropriable markets for inventions are limited and competitive pressures can decrease incentives to innovate firms vertically integrate r d and production and share technology to appropriate the returns to ip this implies that antitrust policy and ip protections are complements

risk sharing in licensing abstract this paper studies the design of linear license contracts under demand or cost uncertainty the optimal contract consists in general of a mix of a fixed fee and royalties the source of uncertainty has a crucial impact on the type of royalties that must be used in particular under demand uncertainty at most two of the instruments are used the contract generally combines a fixed fee with an ad valorem royalty when cost is uncertain a wider variety of cases can arise the contract may involve a combination of either type of royalties coupled with a fixed fee alternatively it may be optimal to use all three available instruments

optimal licensing of uncertain patents in the shadow of litigation this paper investigates the choice of a licensing mechanism by the holder of a patent whose validity is uncertain we provide sufficient conditions of a general nature under which the licensor prefers to use a per unit royalty contract in particular we show that this is the case for the holders of weak patents if the strategic effect of an increase in a potential licensee s unit cost on the equilibrium industry profit is positive the latter condition is shown to hold in a cournot resp bertrand oligopoly with homogeneous resp differentiated products under general assumptions on the demands faced by firms as a byproduct of our analysis we contribute to the literature on the cost paradox in oligopoly by offering some new insights of independent interest regarding the effects of cost variations on cournot and bertrand equilibria

lending relationships and labor market dynamics abstract motivated by a negative link between credit spreads and labor force participation lfp and a positive link between these spreads and unemployment over the business cycle we study the role of lfp as an amplification mechanism of financial shocks in a labor search model with endogenous lfp lending relationships and credit market disruptions amid aggregate productivity and financial shocks that replicate the empirical volatility of lfp and credit spreads the model produces highly volatile unemployment and vacancies countercyclical credit spreads and unemployment and procyclical lfp when we quantitatively match the cyclical behavior of credit spreads the interaction between endogenous lfp and financial shocks gives rise to much sharper vacancy fluctuations and plays a key role in generating quantitatively factual cyclical labor market dynamics

licence contracts future exchange clauses and technological competition abstract in an incumbent challenger innovation model this paper examines to what extent licence contracts can internalize the business stealing and common pool externalities occurring in technological competition due to these negative externalities private r d investments are higher than the socially optimal ones licensing of current technology creates a replacement effect for the challenger and thus induces lower research rates special exchange clauses concerning future improvements which are often used in licensing practice partially take care of the common pool externality although the externalities are not internalized completely a grant back clause requiring the licensee to license back improvements to the original licensor can achieve a welfare improvement by reducing the r d investments in some cases below optimal levels if there are no restrictions in setting the ex post licence fee for the improvement socially optimal r d investments can be induced a mutual exchange clause stating that the original licensor must license an improvement to the licensee and vice versa induces social underinvestment in r d

choosing the competition and patent licensing this article examines licensing as a means of choosing the competitors which a patentee monopolist will face in the period after the patent expires the queue of entrants consists of two firms which differ in their relative strengths as competitors for example by size or level of marginal cost by structuring the industry to be composed of weak competitors the incumbent is able to prolong its dominant position in the industry after the patent expires examples are presented in which the evidence suggests that choosing the competition was an important motivation of the licensor s behavior

job matching and propagation in the u s labor market the vacancy unemployment ratio and employment react sluggishly to productivity shocks we show that the job matching model in its standard form cannot reproduce these patterns due to excessively rapid vacancy responses extending the model to incorporate sunk costs for vacancy creation yields highly realistic dynamics creation costs induce entrant firms to smooth the adjustment of new openings following a shock leading the stock of vacancies to react sluggishly

international technology transfer under potential threat of entry a cournot nash framework abstract this paper analyses the possibility of technology transfer from a technologically advanced foreign firm to a domestic firm of a less developed country when the product market is characterized by cournot nash competition the foreign firm is not allowed to enter the home market by a prohibitive tariff but the backward firm may not face any such resistance in the foreign markets this means that technology transfer under this situation involves potential threat of competition from the latecomer it is shown that by designing a suitable payment policy the host country government can induce the foreign firm to transfer the best technology however there are possible equilibria where worse than the best technologies are transferred

incomplete written contracts undescribable states of nature this paper extends the classic two armed bandit problem to a many agent setting in which n players each face the same experimentation problem the difference with the single agent problem is that agents can now learn from the experiments of others thus experiementation produces a public good and a free rider problem in experimentation naturally arises more interestingly future experimentation by others encourages current individual experimentation the paper provides an analysis of the set of markov equilibria in terms of the free rider effect and the encouragement effect

technology licensing contracts with network effects we study the optimal technology licensing contracts with network effects and investigate the welfare implications when the product innovator is an insider that acts as a stackelberg leader we show that i the market is fully covered when relatively small network intensity matches quality differentiations that are sufficiently large ii with regard to profit maximization the optimal licensing strategy varies from one of royalty licensing to two part tariff licensing as network effects increase not including fixed fee licensing iii consumer surplus is optimal under non licensing conditions in comparison to other licensing strategies due to the covered market iv depending on network effects the preferred strategies to achieve social welfare maximization change from no licensing or fixed fee licensing to two part tariff licensing and royalty licensing is not preferred in this instance v conflict does not always or necessarily occur between the goals of enterprise profit maximization and social welfare optimization two part tariff licensing is preferred both by the licensor and by society when the network effect is large

humans environment and economies from vicious relationships to virtuous responsibility abstract the debates questioning the meaning of growth point to a need for a more holistic understanding of human beings and of the economic actor fundamental to economic theory and practice this contribution turns to virtue ethics in order to reframe the self in more reflexive relational and environmental terms we explore the significance of understanding humans sense of responsibility that is quintessentially relational and of their capacity and need to relate to nature as well as community and society we begin by reviewing the main arguments in the thriving debate in ecological economics around what the characteristics of the human being can contribute to implement an ecologically sustainable development our aim is then to draw a link between this debate and that of virtue ethics that leads to a different understanding of the human being of what can contribute to individual wellbeing and a good life responsibility we argue is not only a value but a virtue that enables individuals to find meaning in acting responsibly towards the environment emphasising the multiple benefits that arise from framing good lives in active terms we conclude reflecting on the challenges to and implications of our proposition for government institutions particularly education

an analysis of cooperative research and development i analyze the effects of cooperative research whereby member firms agree to share the costs andfruits of a research project before they undertake it in this model industrywide agreements tend to have socially beneficial effects when the degree ofproduct market competition is low when there are r d spillovers in the absence of cooperation when a high degree of sharing is technologically feasible and when the agreement concerns basic research rather than development activities i show that a royalty free cross licensing agreement among any number offirms lowers the equilibrium level of innovation even though it increases the efficiency of r d through sharing

drastic innovations and multiplicity of optimal licensing policies abstract considering the licensing of a drastic cost reducing innovation by an outside innovator in an n firm cournot oligopoly we show that when the innovator uses combinations of fees and royalties there are either n 1 or n optimal licensing policies

technology transfer under asymmetric information licensing contracts for newly patented innovations are observed to vary along several dimensions including the form and size of the payment to the inventor fixedfee versus some output based royalty the degree of exclusivity and the division of rents in this article we show that theform of the contract can be explained by two problems in technology exchange the superiority of a licensor s precontractual information about the economic value of the innovation and thefact that sharing this information with the licensee mayfacilitate imitation we show that a licensor signals her technology type with an output based payment or royalty and may leave some of the rents with the licensee conditions under which exclusive license contracts linear and nonlinear and nonexclusive linear contracts are used to transfer technology are identified

deterrence by market sharing a strategic incentive for licensing the potential of an incumbent firm to retain its dominant position in a market is a focal point of the modem theory of industrial organization a recent literature examines this issue for markets in which challengers threaten an incumbent s position by engaging in research for a new technology richard gilbert and david newbery 1982 show that an incumbent firm with a firstmover advantage will preempt potential entrants by inventing a new technology slightly earlier than would its rivals in a stochastic r d therefore its introduction does not alter the decision to research when the pre innovation market is characterized by an incumbent and potential entrants stephen salant 1984 shows that licensing ex post to innovation can alter the research decision as anticipation of the returns from future licensing encourages research by the entrant as a counterpoint to the salant result i find that licensing ex ante to research may discourage further research by the entrant indeed this strategic incentive for licensing may be so strong as to persuade the incumbent as well as the entrant to terminate research activity to isolate this incentive for licensing from the one discussed by salant a simple model is constructed in which licensing of future technologies is not desirable anecdotal evidence suggests that the strategic incentive does lead innovators in some markets to license their technologies examples of this information sharing are prevalent in markets where technological change is rapid in the 1940 s standard oil of new jersey discovered a process for synthetic rubber it traded patent rights on this process for a synthetic oil production process discovered by farben a german rubber company in both the synthetic oil and synthetic rubber markets rival companies were department of economics scarsborough college university of toronto toronto ontario canada m5s lal i thank jon cohen and ron saunders for discussions that inspired this paper i am also grateful to yehuda kotowitz andy mclennan jennifer reinganum ralph winter myma wooders two anonymous referees and seminar participants at the university of toronto for helpful comments on earlier drafts

licensing information goods abstract a significant amount of research on patent licensing and the diffusion of knowledge is organized around static frameworks of analysis patent holders however may face a dynamic problem namely the intertemporal consistency problem of the durable goods monopolist that is induced by durability on the demand side licensing practices such as exclusive licensing contracts and most favored customer clauses allow patentees to solve or mitigate this dynamic consistency problem there are situations however where these practices are not possible either due to the nature of the patent the case of information goods or due to compulsory patenting laws we study the effects of the intertemporal consistency problem on patent licensing in these situations relative to the existing literature we obtain the following main results i all of the firms that remain in the industry will be using the innovation ii royalty licensing may be superior to fixed fee or auction licensing from the licensor s point of view iii social welfare and consumer surplus may be lower than when the patent holder can commit not to make additional sales iv even for non drastic innovations the price of the good that is produced may be lower than the competitive price corresponding to the initial situation before the innovation was discovered

fee versus royalty licensing in a cournot duopoly model abstract this paper finds that royalty licensing can be superior to fixed fee licensing for the patent holding firm when the cost reducing innovation is non drastic the reason for this result is that the patent holding firm enjoys a cost advantage over the licensee under royalty licensing while the two firms compete on equal footing under fixed fee licensing

planned obsolescence and the r d decision by investing in rd i e the r d choice that maximizes current profitability does not maximize overall profitability the result is that if output is sold rather than rented then in its r d decision the monopolist has an incentive to practice a type of planned obsolescence that lowers its own profitability

licensing weak patents in this paper we revisit the issue of licensing weak patents under the shadow of litigation departing from the seminal paper by farrell and shapiro 2008 we consider innovations of any size and not only small innovations and we allow the number of licensees to be less than the number of firms in the downstream industry it is shown that the optimal two part tariff license from the patent holder s perspective may either deter or trigger litigation and conditions under which each case arises are provided we also reexamine the claim that the licensing revenues from weak patents overcompensate the patent holder relative to what a natural benchmark would command finally we suggest two policy levers that may alleviate the harm raised by the licensing of weak patents

multilateral limit pricing in price setting games abstract in this paper we characterize the set of pure strategy undominated equilibria in differentiated bertrand oligopolies with linear demand and constant unit costs when firms may prefer not to produce when all firms are active there is a unique equilibrium however there is a continuum of non equivalent bertrand equilibria on a wide range of parameter values when the number of firms n is more than two and n 2 n 1 firms are active in each such equilibrium the firms that are relatively more cost or quality efficient limit their prices to induce the exit of their rival s when n 3 this game does not need to satisfy supermodularity the single crossing property or log supermodularity moreover the best responses might have negative slopes our main results extend to a stackelberg entry game where some established incumbents first set their prices and then a potential entrant sets its price

the macroeconomics of labor and credit market imperfections labour market frictions are not the only possible source of high unemployment credit market imperfections driven by microeconomic frictions and influenced by macroeconomic factors could also be to blame to develop this idea in a simple and tractable macroeconomic model we treat credit and labour market imperfections in a symmetrical way accordingly we introduce specificity in credit relationships and assume that credit to potential entrepreneurs is rationed due to endogenous search frictions in the spirit of diamond 1990 these imperfections mirror job search frictions in the labour market we study the determination of equilibrium unemployment in the presence of credit market frictions both with exogenous and endogenous wages we explore a number of possible extensions endogenous destruction monetary policy and the short run effects of financial liberalization

abuse of dominance and licensing of intellectual property patent thickets layers of licenses a firm needs to be able to offer products that embody technologies owned by multiple firms and licensing policies have drawn increasing scrutiny from policy makers patent thickets involve complementary products which gives rise to double marginalization the so called royalty stacking problem and has the potential to retard diffusion of new technologies and reduce consumer welfare this paper examines the impact of licensing policies of one or more upstream owners essential intellectual property ip on the downstream firms that require access to that ip the terms under which downstream firms can access this ip affects entry decisions product diversity prices and welfare we consider both the case in which a single party controls the essential ip and the case in which different parties control complementary pieces of essential ip we compare the outcome of several alternative standard licensing arrangements such as flat rate access fees royalty percentages per unit fees patent pools and cross licensing arrangements with or without vertical integration we first consider the case where there is a single upstream owner of essential ip increasing the number of licenses enhances product variety which creates added value but it also intensifies downstream competition which dissipates profits we derive conditions under which the upstream ip monopoly will then want to provide an excessive or insufficient number of licenses relative to the number that maximizes consumer surplus or social welfare when there are multiple owners of essential ip royalty stacking can reduce the number of the downstream licensees but also the downstream equilibrium prices the consumers face the paper derives conditions determining whether this reduction in downstream price and variety is beneficial to consumers or society finally the paper explores the impact of alternative licensing policies with fixed license fees or royalties expressed as a percentage of the price an upstream ip owner cannot control the intensity of downstream competition in contrast volume based license fees i e per unit access fees do permit an upstream owner to control downstream competition and to replicate the outcome of complete integration the paper also shows that vertical integration can have little impact on downstream competition and licensing terms when ip owners charge fixed or volume based access fees

university licensing of patents for varietal innovations in agriculture there has been a sharp increase in the number of patented agricultural products from public universities in the united states we develop an experiment to examine the revenue stream to universities from licensing plant based innovations in the experiment we asked subjects to bid for access for a patented input that would be used to manufacture a differentiated product treatments were employed to solicit bids that were financed by fees royalties and a combination of the two mechanisms under exclusive and non exclusive contracts the literature studying the economics of downstream duopoly competition in quantity suggests that revenues for the innovator would be greatest under a non exclusive contract that uses fees and royalties in our experiment we allow more than two firms to obtain access to the patent in the non exclusive treatments and our empirical results suggest that innovator revenues are greatest when royalties are used alone in a non exclusive contract

licensing a sequence of innovations it is common for a firm which receives a license for a technology also to obtain as part of the contract a license for future improvements on that technology we derive market structure reasons why such a provision might be used in a two period setting

fee versus royalty reconsidered for an outsider innovator in a cournot oligopoly royalty licensing could be superior to both fixed fee and auction the result depends on a simple fact that has been overlooked in the existing literature namely the number of licenses can take only integer values

how strong are weak patents economists usually conceive of patents as property rights that prevent others from practicing the patenting technology unless they first obtain a license from the patent holder even for ironclad patents i e for patents that are certain to be valid the existing literature has shown that the analysis of equilibrium licensing contracts is surprising subtle and complex 1 for example the analysis is quite different depending upon whether one firm s licensing contract is observable to the other firms likewise equilibrium outcomes are quite different if royalties must be linear than in the case where two part tariffs and other non linear royalties are permitted in that literature a downstream firm that refuses to sign a contract with the upstream supplier either exits the industry in the case that the upstream supplier controls an essential input or must rely on more costly inputs in the case of a non essential input in other words the downstream firm s threat point is to use some backstop technology in practice however patents are issued after a brief examination by the patent office to see if they meet the statutory requirements for novelty and non obviousness mounting evidence indicates that many weak patents i e patents unlikely to be found valid if challenged in court are issued by the u s patent and trademark office uspto 2 some observers view this with great alarm arguing that uspto is handing out undeserved monopolies others by contrast have suggested that these weak patents are of little concern because they will have little commercial impact because they will be licensed at commensurately low royalty rates or not enforced at all we study the commercial impact of weak patents more precisely we define a patent s strength as the probability that it will be found valid if challenged in court and we examine the relationship between a patent s strength and the royalties that it can command the distinctive

an analysis of intellectual property licensing strategy under duopoly competition component or product based abstract a component supplier holding patents can calculate the intellectual property licensing fees either as a percentage of sales prices of its customer manufacturers products i e product based strategy or as a percentage of the wholesale price of its component i e component based strategy selecting which strategy to license the patent plays a vital role in supply chain players strategic interactions especially when the downstream manufacturers compete this paper investigates which strategy is favored more by players of a supply chain which consists of a component supplier and two duopoly manufacturers the manufacturers are assumed to be heterogeneous in production cost but produce and competitively sell homogenous goods employing a supplier stackelberg game model we demonstrate that the component supplier prefers to implement the product based strategy nevertheless the manufacturers preferences are dependent on how effectively they produce products specifically the product based strategy could be favored by the manufacturer with a sufficiently high cost advantage over the rival furthermore we find that the supply chain players preferences of licensing strategy could be dependent on factors such as the market size the differences of the production costs and unit royalty fees when the products are imperfect substitutes

technology transfer with moral hazard abstract this paper develops an incomplete contract model of the licensing relationship that is susceptible to the moral hazard problem the optimal contractual form of licensing derived in the model generates predictions that seem to be consistent with actual practice for instance the introduction of inputs that are not contractible and costly explains the prevalence of royalty contracts in the licensing relationship moreover the model is able to relate the size of the royalty rate to the parameters that represent the environments under which the concerned parties operate finally the model can be naturally extended to analyze the choice of a technology holder between direct investment and licensing in an attempt to serve a foreign market

licensing under general demand and cost functions abstract we consider a cournot duopoly under general demand and cost functions where an incumbent patentee has a cost reducing technology that it can license to its rival by using combinations of royalties and upfront fees two part tariffs we show that for drastic technologies a licensing occurs and both firms stay active if the cost function is superadditive and b licensing does not occur and the patentee monopolizes the market if the cost function is additive or subadditive for non drastic technologies licensing takes place provided the average efficiency gain from the cost reducing technology is higher than the marginal gain computed at the licensee s reservation output optimal licensing policies have both royalties and fees for significantly superior technologies if the cost function is superadditive by contrast for additive and certain subadditive cost functions optimal licensing policies have only royalties and no fees

microeconomic degrowth the case of community supported agriculture in this paper we attempt to build a new microeconomic approach that could be considered as a basis of the degrowth macroeconomic view as degrowth is a critique of the dominant macroeconomic model of the endless search for economic growth its microeconomic foundations can be built by searching a relevant grass root economic initiative to theorise our approach is based upon the case study research of a self harvesting community supported agriculture in belgium the mainstream microeconomic model is based on the well known homo economicus assumption of individual self interest and competitive behaviour by contrast our model is based on a holistic approach of producers and consumers based upon trust cooperation and ecologically responsible behaviours this contribution participates to the flourishing literature on degrowth in ecological economics we begin by reviewing the debate on degrowth and economic behaviour we discuss the case study and its accounting expression that departs from the capitalist profit seeking model we conclude by explaining the limits and challenges of our model that implements degrowth on a small scale and in a capitalist environment

welfare reducing licensing abstract in this paper we characterize situations where licensing a cost reducing innovation to a rival firm using two part tariff contracts a fixed fee plus a linear per unit of output royalty reduces social welfare we show that it occurs if i the firms compete in prices ii the innovation is large enough but not drastic and iii the goods are close enough substitutes moreover we show that regardless of the type of competition first the optimal contract always includes a positive royalty and second even drastic innovations are licensed whenever the goods are not homogeneous

fees versus royalties and the private value of a patent we compare how much profit an owner of a patented cost reducing invention can realize by licensing it to an oligopolistic industry producing a homogeneous product by means of a fixed fee or a per unit royalty our analysis is conducted in terms of a noncooperative game involving n 1 players the inventor and the n firms in this game the inventor acts as a stackelberg leader and it has a unique subgame perfect equilibrium in pure strategies it is shown that licensing by means of a fixed fee is superior to licensing by means of a royalty for both the inventor and consumers only a drastic innovation is licensed to a single producer

business cycles and labor market search the quantitative implications of labor market search for economic fluctuations are evaluated in the context of a real business cycle model incorporating labor market search into the model is found to improve its empirical performance along several dimensions in particular hours now fluctuate substantially more than wages and the contemporaneous correlation between hours and productivity falls in addition the model replicates the observation that output growth displays positive autocorrelation at short horizons overall the empirical results suggest that the labor market search environment embodies a quantitatively important propagation mechanism copyright 1996 by american economic association

on licensing policies in bertrand competition abstract three licensing policies the auction the fee and the royalty are studied in a bertrand type duopoly with differentiated goods the analysis is conducted in terms of a multistage noncooperative game involving an external patentee and two firms each producing a differentiated good in bertrand price competition a principal finding is that for a patentee the royalty may be superior to the other two policies journal of economic literature classification numbers 026 611 621

how to license intangible property we examine the optimal licensing strategy of a research lab selling to firms who are product market competitors we consider an independent lab as well as a research joint venture we show that 1 demands are interdependent and hence the standard price mechanism is not the profit maximizing licensing strategy 2 the seller s incentives to develop the innovation may be excessive 3 the seller s incentives to disseminate the innovation typically are too low 4 larger ventures are less likely to develop the innovation and more likely to restrict its dissemination in those cases where development occurs and 5 a downstream firm that is not a member of the research venture is worse off as a result of the innovation

optimal long run inflation with occasionally binding financial constraints abstract this paper studies the optimal long run inflation rate in a simple new keynesian model with occasionally binding collateral constraints that intermediate good firms face on hiring labor the paper finds that the optimal long run annual inflation rate is around 1 5 if the economy is hit by a total factor productivity tfp shock and nearly 2 5 if the economy is subject to a markup shock the shadow value of the collateral constraint is akin to an endogenous cost push shock differently from usual cost push shocks however this shock is asymmetric as it takes non negative values only since the mean of this asymmetric endogenous cost push shock is positive inflation is also positive on average in addition a binding collateral constraint resembles a time varying tax on labor which the monetary authority can smooth by setting a positive inflation rate more generally the basic result is related to standard ramsey theory in that optimal policy smoothes distortions over time

licensing a new product with non linear contracts this paper looks at a situation where a licensor owns a patent on a technology that allows the production of a new good the licensor seeks to license its innovation to a set of producers that differ according to their marginal cost of producing an existing good we show that the licensor is able to obtain the profit a monopolist would achieve by producing the new good the equilibrium licensing contract specifies both a fixed fee and a royalty scheme based on the production of a licensee le memoire examine la situation ou un detenteur de brevet sur une technologie qui permet de produire un nouveau bien cherche a ceder une autorisation d exploiter cette innovation a un ensemble de producteurs qui ont differents couts marginaux de production d un bien existant on montre que le detenteur de brevet est capable d obtenir le profit qu un monopoleur obtiendrait en produisant le nouveau bien le contrat de licence d equilibre specifie a la fois un paiement forfaitaire et un arrangement de royautes sur la base du volume de production de l exploitant

costly external finance and labor market dynamics abstract we study the role of agency frictions and costly external finance in cyclical labor market dynamics with a focus on how credit market frictions may amplify aggregate tfp shocks the main result is that aggregate tfp shocks lead to large fluctuations of labor market quantities if the model is calibrated to the empirically observed countercyclicality of the finance premium a financial accelerator mechanism thus amplifies labor market fluctuations by rendering rigidity in real wage dynamics in contrast if the finance premium is procyclical which the model can be parameterized to accommodate amplification is absent and labor market fluctuations display the shimer 2005 puzzle

pursuing self interest or self actualization from capitalism to a steady state wisdom economy the co evolution of capitalism democracy and science since 1800 has led to enormous progress but also major existential problems this article asserts that these problems are rooted in neo classical economics narrow focus within human nature on self interest which causes intense conflicts for scarce resources among people societies species and generations it describes how an emphasis on the totality of human nature in life with a focus on self actualization instead of self interest as the main driving force and wisdom rather than wealth as the ultimate aim can lead to a steady state wisdom economy that can simultaneously ensure high personal welfare and collective sustainability

contracting for tacit knowledge the provision of technical services in technology licensing contracts abstract recent research on the economic payoff from new technology has emphasized the importance of tacit knowledge or know how this paper shows that arm s length contract can overcome the problems in contracting for know how by bundling complementary inputs with know how in a technology package and leveraging the superior enforceability of contracts over the latter in the empirical part of this paper the relationship between bundling and transfer of know how is analyzed using indian data the results imply that tied sales of inputs may increase the efficiency of contracts involving the transfer of know how a striking result in the context of the current north south debates on intellectual property rights is the packaging of patents with know how

general licensing schemes for a cost reducing innovation optimal combinations of upfront fees and royalties are considered for a cost reducing innovation in a cournot oligopoly for both outside and incumbent innovators it is shown that for any nondrastic innovation a the license is practically sold to all firms ensuring full diffusion of the innovation b consumers are better off firms are worse off and the social welfare is improved c the optimal licensing policy involves positive royalty for relatively significant innovations d compared to an incumbent firm an outsider invests more in r d and has higher incentive to innovate and e as a function of the magnitude of the innovation the industry size that provides the highest incentive to innovate is u shaped

on the duration of technology licensing abstract we model an innovator s choice of payment scheme and duration as a joint decision in a multi period licensing game with potential future innovations and some irreversibility of technology transfer we find that it may be optimal to license the innovation for less than the full length of the patent and that royalty contracts can be more profitable than fixed fee licensing even in the absence of information asymmetry and risk aversion moreover licensing contracts based on royalty have a longer duration than fixed fee licenses and are more likely to be used in industries where innovations are frequent and intellectual property protection is weak our paper also highlights an important link between the study of technology licensing and the theory of durable goods

borrowing constraints collateral fluctuations and the labor market abstract this paper studies the effects of changes in collateral requirements on the cyclical properties of unemployment and job creation i develop a general equilibrium model in which labor market frictions prevent the costless adjustment of employment financial frictions arise from an imperfect enforcement contract an environment in which borrowing limits are linked to the firm s physical capital stock can quantitatively account for the sluggish response of labor market variables to productivity shocks i find that fluctuations in those variables are mainly driven by changes in financial conditions the model can explain 75 of the variation in job creation observed in the data and it can also account for the persistent reduction in both output and leverage that follows a contraction in credit availability

search wage bargains and cycles in this paper i describe an equilibrium model of job matchings with perfect foresight that has the following property the number of people looking for work changes temporarily when there is a temporary shock to the value of labour s marginal product it does not change when the shock is permanent by contrast real wages change temporarily by a small amount when the shock is temporary but change permanently and by a bigger amount when the shock is permanent thus the model offers an explanation for the observation that over the cycle small wage changes are associated with changes in unemployment whereas secularly wage growth does not seem to affect the rate of unemployment the two most common explanations for this observation in the literature the phelps lucas misperceptions model and the lucas rapping intertemporal substitution model are well grounded in equilibrium theory but they have not stood up well to empirical testing the misperceptions model requires more ignorance of aggregate changes than can be reasonably assumed whereas the intertemporal substitution model requires bigger wage elasticities of labour supply than those estimated in the model of this paper neither misperceptions nor changes in the supply of labour play a role in generating the unemployment cycle all agents observe the shocks when they occur and they anticipate correctly the economy s adjustment path but like the new classical explanations of the cycle the model is an equilibrium one in the sense that all private gains from trade are fully exploited at all phases of the cycle although the social gains from trade may not be fully exploited because of search externalities the cycle i derive here is not due to externalities unlike other related perfect foresight models such as diamond s 1982a the structure of the model is such that the externalities do not give rise to multiple equilibria the key element of the model which is responsible for the transmission of output shocks to unemployment is the equation for wages in markets where the allocation of jobs takes place through search both firms and workers have some monopoly power a point emphasised by mortensen 1970 though he attributed only temporary monopoly power and only to firms i use the nash bargaining solution to solve for the equilibrium wage rate and show that the firm s and worker s alternative returns threat points or

patents vs trade secrets knowledge licensing and spillover we develop a model of two stage cumulative research and development rd yet the contracting parties choose the closed sale whenever the interim knowledge is more valuable and leakage is sufficiently high if the extent of leakage is lower more rus choose open sales generating a nonmonotonic relationship between the strength of intellectual property rights and aggregate r d expenditures and the overall likelihood of development by either du jel d23 o32 o34