2007/01/01 by Elmar G. Wolfstetter, Wolfstetter, Elmar, Thomas Giebe +1
Business, Management and Accounting · Decision Sciences · Economics, Econometrics and Finance · #Auction Theory and Applications #Auctions #Digital Platforms and Economics #Licensing #Merger and Competition Analysis #Patents
paper · pdf · doi:10.4230/dagsemproc.07271.9
openalex publication_date 2007/01/01 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/28
This paper revisits the licensing of a non--drastic process innovation by an outside innovator to a Cournot oligopoly. We propose a new mechanism that combines a restrictive license auction with royalty licensing. This mechanism is more profitable than standard license auctions, auctioning royalty contracts, fixed--fee licensing, pure royalty licensing, and two-part tariffs. The key features are that royalty contracts are auctioned and that losers of the auction are granted the option to sign a royalty contract. Remarkably, combining royalties for winners and losers makes the integer constraint concerning the number of licenses irrelevant.