Supply licensing when the manufacturer strategically commits to invest in R&D

Supply licensing when the manufacturer strategically commits to invest in R&D

0.00 Avg rating0 Votes
Article ID: iaor201524026
Volume: 61
Issue: 4
Start Page Number: 341
End Page Number: 350
Publication Date: Jun 2014
Journal: Naval Research Logistics (NRL)
Authors: , ,
Keywords: game theory, innovation
Abstract:

This article proposes a strategic reason for a proprietary component supplier to license her technology to a competitor or a manufacturer: her anticipation of the manufacturer's strategic commitment to invest in research and development (R&D). We address this phenomenon with a game theoretic model. Our results show that the manufacturer's full commitment to invest in R&D enables the supplier to license, sell a larger quantity through the supply chain, and charge lower prices. These results are robust to the type of demand uncertainty faced by the manufacturer within the class of increasing generalized failure rate distributions.

Reviews

Required fields are marked *. Your email address will not be published.