Author(s)

Jun-Yen Wu^1*, Hong-Ren Din²

¹Department of Business Administration, TransWorld University, Douliu.
²Department of Tourism and Hospitality, TransWorld University, Douliu.

This paper explores the optimal licensing contract, in which the manufacture firm holds the equity of the retail firm and licenses the cost-reducing innovation to the vertically integrated firm. The objective of this paper is to investigate the effect of the retail firm’s equity on the manufacture firm’s licensing decisions. The paper shows that the manufacture firm prefers royalty (fixed-fee) licensing when the manufacture firm holds large (small) equity of the retail firm.

Vertically Related Markets, Fixed-Fee and Royalty Licensing, Two-Part Tariff

Wu, J. and Din, H. (2015) Technology Licensing and Shareholding in Vertically-Related Markets. Modern Economy, 6, 387-391. doi: 10.4236/me.2015.63035.