Absorptive capacity, product heterogeneity and technology licensing under different fee scenarios

Abstract

AbstractSince a licensee does not always fully absorb technology in the process of technology licensing, based on the consideration of incomplete absorption, this paper establishes a game model consisting of a technology research and development firm and two licensee firms, to explore the most licensing strategies of the licensing firms as well as the optimal social welfare of the licensee under different fee scenarios. The results of the study show that (1) under the flat fee scenario, technology R&D enterprises will choose royalty licensing in most cases, but when the gap in the absorptive capacity of the licensed enterprise is small and the difference in the quality of the products between the two licensing parties is large, fixed‐fee licensing is a more preferable option;(2)in the differential fee scenario, technology R&D firms prefer differential fixed fee licenses;(3)when technological empowerment occurs, local social welfare is enhanced;(4)technology development firms prefer firms with high absorptive capacity, but also charge higher fees;(5)differential fees charged by technology R&D firms to authorized firms do not always lead to a relative decline in local social welfare; they can lead to a greater enhancement of social welfare within a certain interval, and the enhancement is even greater than the enhancement of social welfare brought about by uniform fees.