Decision making on strategic environmental technology licensing: Fixed-fee versus loyalty licensing methods

Ming Chung Chang*, Jin-Li Hu, Gwo Hsiung Tzeng

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

12 Scopus citations

Abstract

Because of a deterioration in the quality of the environment, this paper studies the effects of the environment and the economy on environmental technology licensing in a homogeneous Cournot duopoly model in order to reduce environmental pollution and hence improve social welfare. To this end, two licensing methods namely, a fixed-fee licensing method and a royalty licensing method are compared. It is found that a high emission tax rate induces the innovator to not license the environmental technology to the licensee under the fixed-fee licensing method. As for social welfare, a large innovation scale of environmental technology does not guarantee that social welfare will be maximized. Finally, a large innovation scale of environmental technology is likely to increase consumer surplus if the marginal environmental damage is significant. Consumers are likely to prefer royalty licensing to fixed-fee licensing. This conclusion differs from Wang's finding in 2002.

Original languageEnglish
Pages (from-to)609-624
Number of pages16
JournalInternational Journal of Information Technology and Decision Making
Volume8
Issue number3
DOIs
StatePublished - 1 Sep 2009

Keywords

  • Fixed-fee
  • Game theory
  • Innovation
  • Licensing
  • Royalty

Fingerprint Dive into the research topics of 'Decision making on strategic environmental technology licensing: Fixed-fee versus loyalty licensing methods'. Together they form a unique fingerprint.

Cite this