Farsighted stability in patent licensing: An abstract game approach

Toshiyuki Hirai, Naoki Watanabe, Shigeo Muto

Research output: Contribution to journalArticle

Abstract

This paper analyzes the negotiations made by an external patent holder and potential licensee firms in a new model of patent licensing, assuming that they are all farsighted, and characterizes the symmetric farsighted stable sets. Given a net profit of each licensee firm, a set of outcomes is a symmetric farsighted stable set if and only if, at any outcome in the set, each licensee firm receives the net profit and the number of licensee firms maximizes the patent holder's profit provided that licensee firms obtain the net profits. We also show the close relationship between the symmetric farsighted stable sets and the relative interior of the core. Further, we confirm that the symmetric farsighted stable sets are the absolutely maximal farsighted stable sets (Ray and Vohra, forthcoming) as well as the history dependent strongly rational expectation farsighted stable sets (Dutta and Vartiainen, forthcoming).

Original languageEnglish
Pages (from-to)141-160
Number of pages20
JournalGames and Economic Behavior
Volume118
DOIs
Publication statusPublished - 2019 Nov 1

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Keywords

  • Abstract game
  • Farsighted stable set
  • Maximality
  • Patent licensing

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics

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