| With patented process invention, the cost of production is reduced. Inventor (patentee) realizes a profit through licensing of the patent, and society receives disclosure of information that might be kept secret otherwise, as well as technological advances.; The purpose of this thesis is to employ a game-theoretic framework for the analysis of the patentee's licensing strategies and to discuss the effects on the patentee and consumers. The main different set up from other literatures is that the patentee is also one of the firms in the industry in this thesis. Therefore, the patent-holding firm profits not only through licensing of patent, but also through his own working of the patent.; This thesis first compares licensing by means of three common modes: royalty licensing, fixed-fee licensing, and auction licensing, by a three-firm and a (n+1)-firm Cournot model with a homogeneous product under a three-stage licensing game. Furthermore, it establishes a three-firm Cournot model where firms focus on the managerial incentives instead of traditional profit-maximization objective, and examines how this new feature affects the patent-licensing patterns under a four-stage licensing game.; This thesis finds that royalty licensing can be superior to fixed-fee or auction licensing for the patent-holding firm when the cost-reducing innovation is non-drastic, and also under strategic delegation. The patent-holding firm's total income is higher under strategic delegation than under profit maximization by means of royalty licensing. Besides, with non-drastic innovation, fixed-fee licensing is at least as good as licensing by means of royalty or auction for consumers generally. With a drastic innovation, licensing will not occur, and the patent-holding firm will become a monopoly. |
