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.