Licensing radical product innovations to speed up the diffusion

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Show simple item record Avagyan, Vardan Esteban-Bravo, Mercedes Vidal-Sanz, Jose M.
dc.contributor.editor Universidad Carlos III de Madrid. Departamento de Economía de la Empresa 2011-12-02T12:39:30Z 2012-02-01T11:22:04Z 2012-02-01T11:22:04Z 2011-11
dc.description.abstract Inventors can commercialize innovative products by themselves and simultaneously license the technology to other firms. The licensee may cannibalize sales of the licensor, but this can be compensated by gains from royalties. We show in this paper how licenses can be used strategically to speed up the new product diffusion process in two instances of markets: (i) a market with strong Intellectual Property Rights (IPR), and (ii) a market with weak IPR holder and pirate rivals. The main findings suggest that licensing is a beneficial strategy for a licensor in the context of strong IPR, because licensor benefits from the royalties, the advertising investment and positive word-of-mouth effects by licensees. We compare this result with a weak IPR context, where piracy speeds up the product diffusion but this does not compensate IPR holder for the sales loss effect who is willing to license to get some royalties. However, pirates do not generally find interesting the licensing agreement. We present a comparative statics analysis based on numerical simulation.
dc.description.sponsorship Research funded by two research projects, by the Comunidad de Madrid and the Spanish Government
dc.format.mimetype application/pdf
dc.format.mimetype text/plain
dc.language.iso eng
dc.relation.ispartofseries UC3M Working papers. Business Economics
dc.relation.ispartofseries 11-10
dc.rights Atribución-NoComercial-SinDerivadas 3.0 España
dc.subject.other Product diffusion models
dc.subject.other Licensing
dc.subject.other Optimal control and differential games
dc.title Licensing radical product innovations to speed up the diffusion
dc.type workingPaper
dc.subject.eciencia Empresa
dc.rights.accessRights openAccess
dc.type.version submitedVersion
dc.identifier.uxxi DT/0000000931
dc.identifier.repec wb113609
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