Licensing endogenous cost-reduction in a differentiated Stackelberg model

In this paper we consider a differentiated Stackelberg model, when the leader firm engages in an R&D process that gives an endogenous cost-reducing innovation. The aim is to study the licensing of the cost-reduction by a two-part tariff. By using comparative static analysis, we conclude that the degree of the differentiation of the goods plays an important role in the results. We also do a direct comparison between our model and Cournot duopoly model.

ESEIG/IPP. Investing in people! Ph.D. scholarship, Investing in people! Ph.D. scholarship, Project co-financed by the Sectoral Operational Program for Human Resources Development 2007-2013 Priority Axis 1. Education and training in support for growth and development of a knowledge based society Key area of intervention 1.5: Doctoral and post-doctoral programs in support of research. Contract POSDRU/88/1.5/S/60185 - Innovative Doctoral Studies in a Knowledge Based Society, Babes-Bolyai University, Cluj-Napoca, Romania.