License to be more innovative

Ping LIN

doi:10.1023/A:1007710417985

License to be more innovative

Ping LIN

Research output: Journal Publications › Journal Article (refereed) › peer-review

5 Citations (Scopus)

Abstract

A patent holder may choose to give up its current leading position through patent licensing in order to increase its incentive to innovate further and thus avoid falling behind its rivals in future RandD races. We show that because of this “catching-up” effect, licensing may occur even when it reduces current industry profits. The overall effect of licensing is to slow down the pace of innovation, as it reduces the licensee's incentive to conduct RandD.

Original language	English
Pages (from-to)	271-278
Number of pages	8
Journal	Review of Industrial Organization
Volume	12
Issue number	2
DOIs	https://doi.org/10.1023/A:1007710417985
Publication status	Published - 1 Apr 1997
Externally published	Yes

Keywords

Licensing
R and D race

Access to Document

10.1023/A:1007710417985

DC@Lingnan

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abstract = "A patent holder may choose to give up its current leading position through patent licensing in order to increase its incentive to innovate further and thus avoid falling behind its rivals in future RandD races. We show that because of this “catching-up” effect, licensing may occur even when it reduces current industry profits. The overall effect of licensing is to slow down the pace of innovation, as it reduces the licensee's incentive to conduct RandD.",

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AB - A patent holder may choose to give up its current leading position through patent licensing in order to increase its incentive to innovate further and thus avoid falling behind its rivals in future RandD races. We show that because of this “catching-up” effect, licensing may occur even when it reduces current industry profits. The overall effect of licensing is to slow down the pace of innovation, as it reduces the licensee's incentive to conduct RandD.

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KW - R and D race

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