License to be more innovative
Review of Industrial Organization
Kluwer Academic Publishers
Licensing, R&D race
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 R&D 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 R&D.
Copyright © 1997 Kluwer Academic Publishers.Access to external full text or publisher's version may require subscription.
Lin, P. (1997). License to be more innovative. Review of Industrial Organization, 12(2), 271-278. doi: 10.1023/A:1007710417985