DP6207 Exclusive versus Non-exclusive Licensing Strategies and Moral Hazard
Author(s): | Patrick W. Schmitz |
Publication Date: | March 2007 |
Keyword(s): | Innovation, Licences, Monopoly, Private information |
JEL(s): | D45, D82, L12 |
Programme Areas: | Industrial Organization |
Link to this Page: | cepr.org/active/publications/discussion_papers/dp.php?dpno=6207 |
An upstream firm can license its innovation to downstream firms that have to exert further development effort. There are situations in which more licenses are sold if effort is a hidden action. Moral hazard may thus increase the probability that the product will be developed.