Product innovation in a vertically differentiated model

Filippini, Luigi ; Vergari, Cecilia (2012) Product innovation in a vertically differentiated model. Bologna: Dipartimento di Scienze economiche, p. 21. DOI 10.6092/unibo/amsacta/4181. In: Quaderni - Working Paper DSE (833). ISSN 2282-6483.
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Abstract

We study the licensing incentives of an independent input producer owning a patented product innovation which allows the downstream firms to improve the quality of their final goods. We consider a general two-part tariff contract for both outside and incumbent innovators. We find that technology diffusion critically depends on the nature of market competition (Cournot vs. Bertrand). Moreover, the vertical merger with either downstream firm is always privately profitable and it is welfare improving for large innovations: this implies that not all profitable mergers should be rejected.

Abstract
Document type
Monograph (Working Paper)
Creators
CreatorsAffiliationORCID
Filippini, Luigi
Vergari, Cecilia
Keywords
Patent licensing, two-part tariff, vertical differentiation, vertical integration
Subjects
ISSN
2282-6483
DOI
Deposit date
17 Mar 2015 15:31
Last modified
31 Mar 2015 13:19
URI

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