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A Dynamic Analysis of Licensing: The "Boomerang" Effect and Grant-Back Clauses

Jay Pil Choi; Columbia University. Economics

Title:
A Dynamic Analysis of Licensing: The "Boomerang" Effect and Grant-Back Clauses
Author(s):
Choi, Jay Pil; Columbia University. Economics
Date:
Type:
Working papers
Department:
Economics
Permanent URL:
Series:
Department of Economics Discussion Papers
Part Number:
9697-16
Abstract:
This paper 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 grantback clauses may adversely affect competition because they reduce the licensee’s incentive to engage in R&D and thereby limit rivalry in innovation markets.
Subject(s):
Economics
Item views:
346
Metadata:
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