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- W2912885323 abstract "Patent licensing agreements among competing firms usually involve royalties which are often considered to be anticompetitive as they raise market prices. In this paper we propose simple tax policies than can alleviate the effect of royalties. Considering a Cournot duopoly where firms produce under decreasing returns and trade a patented technology, we show that the interaction of royalties with decreasing returns may generate the counter-intuitive result that market prices decrease in the magnitude of diseconomies of scale. In such cases there exist progressive quantity taxes on firms that weaken the effect of royalties and lower the market prices. These taxes collect sufficient revenue to compensate firms for their losses. As a result, it is possible to design deficit neutral tax-transfer schemes that strictly Pareto improve the welfare of consumers as well as firms." @default.
- W2912885323 created "2019-02-21" @default.
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- W2912885323 date "2019-01-01" @default.
- W2912885323 modified "2023-09-23" @default.
- W2912885323 title "Decreasing Returns, Patent Licensing, and Price-Reducing Taxes" @default.
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- W2912885323 doi "https://doi.org/10.1628/jite-2019-0022" @default.
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