A dynamic analysis of licensing: The "boomerang" effect and grant-back clauses

Research output: Contribution to journalArticle

19 Citations (Scopus)

Abstract

This article develops an incomplete contract model of the licensing relationship to analyze the dynamic effects of licensing on R & D competition in the innovation market and to examine the rationale for often observed "grant-back" clauses. Of particular concern are how the consideration of future competition distorts the licensing relationship and how the grant-back clause can mitigate this distortion. I also evaluate the validity of the casual antitrust argument that grant-back clauses may adversely affect competition because they reduce the licensee's incentive to engage in R & D and thereby limit rivalry in innovation markets.

Original languageEnglish
Pages (from-to)803-829
Number of pages27
JournalInternational Economic Review
Volume43
Issue number3
DOIs
Publication statusPublished - 2002 Aug 1

Fingerprint

Dynamic analysis
Licensing
Innovation
Rivalry
Incentives
Incomplete contracts
Dynamic effects
Rationale

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics

Cite this

@article{f246ed9924b04b8692226d125e7fc83e,
title = "A dynamic analysis of licensing: The {"}boomerang{"} effect and grant-back clauses",
abstract = "This article develops an incomplete contract model of the licensing relationship to analyze the dynamic effects of licensing on R & D competition in the innovation market and to examine the rationale for often observed {"}grant-back{"} clauses. Of particular concern are how the consideration of future competition distorts the licensing relationship and how the grant-back clause can mitigate this distortion. I also evaluate the validity of the casual antitrust argument that grant-back clauses may adversely affect competition because they reduce the licensee's incentive to engage in R & D and thereby limit rivalry in innovation markets.",
author = "Choi, {Jay Pil}",
year = "2002",
month = "8",
day = "1",
doi = "10.1111/1468-2354.t01-1-00036",
language = "English",
volume = "43",
pages = "803--829",
journal = "International Economic Review",
issn = "0020-6598",
publisher = "Wiley-Blackwell",
number = "3",

}

A dynamic analysis of licensing : The "boomerang" effect and grant-back clauses. / Choi, Jay Pil.

In: International Economic Review, Vol. 43, No. 3, 01.08.2002, p. 803-829.

Research output: Contribution to journalArticle

TY - JOUR

T1 - A dynamic analysis of licensing

T2 - The "boomerang" effect and grant-back clauses

AU - Choi, Jay Pil

PY - 2002/8/1

Y1 - 2002/8/1

N2 - This article develops an incomplete contract model of the licensing relationship to analyze the dynamic effects of licensing on R & D competition in the innovation market and to examine the rationale for often observed "grant-back" clauses. Of particular concern are how the consideration of future competition distorts the licensing relationship and how the grant-back clause can mitigate this distortion. I also evaluate the validity of the casual antitrust argument that grant-back clauses may adversely affect competition because they reduce the licensee's incentive to engage in R & D and thereby limit rivalry in innovation markets.

AB - This article develops an incomplete contract model of the licensing relationship to analyze the dynamic effects of licensing on R & D competition in the innovation market and to examine the rationale for often observed "grant-back" clauses. Of particular concern are how the consideration of future competition distorts the licensing relationship and how the grant-back clause can mitigate this distortion. I also evaluate the validity of the casual antitrust argument that grant-back clauses may adversely affect competition because they reduce the licensee's incentive to engage in R & D and thereby limit rivalry in innovation markets.

UR - http://www.scopus.com/inward/record.url?scp=0036687016&partnerID=8YFLogxK

UR - http://www.scopus.com/inward/citedby.url?scp=0036687016&partnerID=8YFLogxK

U2 - 10.1111/1468-2354.t01-1-00036

DO - 10.1111/1468-2354.t01-1-00036

M3 - Article

AN - SCOPUS:0036687016

VL - 43

SP - 803

EP - 829

JO - International Economic Review

JF - International Economic Review

SN - 0020-6598

IS - 3

ER -