Uncertainty and licensing in a vertical structure
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Uncertainty and Licensing in a Vertical Structure. Fang-yueh Chen National Chung Cheng University Tsai-chen Shen Tatung Institute of Commerce and Technology.

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Uncertainty and Licensing in a Vertical Structure

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Uncertainty and licensing in a vertical structure

Uncertainty and Licensing in a Vertical Structure

Fang-yueh Chen

National Chung Cheng University

Tsai-chen Shen

Tatung Institute of Commerce and Technology

This paper is to be presented in「Corporate Governance, Foreign Entry, and Market Competition」International Conference 2011,held in National University of Kaohsiung, R.O.C.


I motivations

I. Motivations

  • Licensing in a vertical structure

  • Licensing with risk sharing

  • Endogenizing insider and outsider models

  • Licensing and vertical externality


Ii purposes

II. Purposes

  • Investigate how an input monopolist shares risks through international licensing and its consequences

  • Examine the impact of entry in the downstream market


Iii literature reviews

III. Literature reviews

  • Related to vertical structure:

    • Mukherjee (2010a), Mukerjee and Ray (2007, MS), Mukherjee and Pennings (2011, IJIO)

  • Related to threat of entry:

    • Kabiraj and Marjit (1993, JDE), Saggi (1996, RIE), Pack and Saggi (2001, JDE), Dinda and Mukherjee (2011, JPET)

  • Related to uncertainty:

    • Bousquet et al. (1998, IJIO)


Iv the basic model

Country J

Country T

Licensing

Firm A

Firm C

input market

Firm B

Country E

Figure 1: The basic model

IV. The basic model


V sequence of moves and main equations cont

V. Sequence of moves and main equations (Cont.)

  • Stage 1: Licensing game

  • Stage 2: Input market equilibrium

  • Stage 3: The uncertainty resolves

  • Stage 4: Final goods market equilibrium


V sequence of moves and main equations

V. Sequence of moves and main equations


Vi the intuition of licensing and the finding cont

VI. The intuition of licensing and the finding (Cont.)


Vi the intuition of licensing and the finding

VI. The intuition of licensing and the finding


Vii equilibrium with licensing and entry mode of an outsider cont

VII. Equilibrium with licensing and entry mode of an outsider (cont.)


Vii equilibrium with licensing and entry mode of an outsider

VII. Equilibrium with licensing and entry mode of an outsider


Viii the extended model

Country J

Country T

Licensing

Firm A

Firm C

Input Market, M1

Input Market, M2

Firm B

Firm D

Country E

Figure 4: The extended model

VIII. The extended model


Ix main equations

IX. Main equations


X the intuition of licensing and the finding

X. The intuition of licensing and the finding


Xi the equilibrium in the extended model cont

XI. The equilibrium in the extended model (Cont.)


Xi the equilibrium in the extended model cont1

XI. The equilibrium in the extended model (Cont.)


Xi the equilibrium in the extended model

XI. The equilibrium in the extended model


Thank for your listening and comments are very welcome

Thank for your listening and comments are very welcome.


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