Cross-border Technology Licensing and Trade Policy

• Ishikawa Jota

  Faculty of Economics, Hitotsubashi University

• Komoriya Yoshimasa

  Faculty of Economics, Chuo University

• Sugita Yoichi

  Faculty of Economics, Hitotsubashi University

Abstract

We construct a theoretical model in which an outside technology licenser licenses its superior technology to either a home firm or a foreign firm, both of which are engaged in Cournot competition in the home market. We specifically explore the relationship between cross-border technology licensing and home tariffs when the two firms are asymmetric. Licensing benefits consumers but harms both home and foreign firms regardless of which firm becomes the licensee. The tariff rate affects the choice of the licensee and home welfare. In contrast with the existing literature on international technology licensing, the welfare-maximizing home government may choose such a tariff rate that induces the licenser to license the technology to the foreign firm. The optimal tariff rate may become negative in the presence of licensing. Trade liberalization may lead the licenser to switch the licensee. JEL Classifications: F12, F13, L13, L24

Journal

• The International Economy

  The International Economy 23 (0), 28-50, 2020

  The Japan Society of International Economics

Keywords

• licensing
• tariffs
• asymmetric firms
• international oligopoly

Details

• CRID: 1390849376472617088
• NII Article ID: 130007950314
• DOI: 10.5652/internationaleconomy/ie2020.23.04.ji
• ISSN: 18844367
• ISSN: 21866074
• Web Site: https://www.jstage.jst.go.jp/article/internationaleconomy/23/0/23_ie2020.23.04.ji/_pdf
• Text Lang: en
• Data Source:
  • JaLC
  • Crossref
  • CiNii Articles
  • KAKEN
• Abstract License Flag: Disallowed