TEL  Vol.1 No.3 , November 2011
Licensing Contracts in Hotelling Structure
ABSTRACT
This paper discusses the question of optimal licensing contracts in Hotelling structure and focuses on the unique features of this structure in this context. We show that a royalty equilibrium exists if and only if transport cost lies in a specified interval, but the royalty rate can be higher than the amount of cost saving. While fee licensing only is never profitable, the optimal licensing contract consists of both fee and royalty. In equilibrium the market is fully covered with monopolistic goods.

Cite this paper
nullT. Kabiraj and C. Lee, "Licensing Contracts in Hotelling Structure," Theoretical Economics Letters, Vol. 1 No. 3, 2011, pp. 57-62. doi: 10.4236/tel.2011.13013.
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