Patent licensing and R&D in the presence of firm heterogeneity

Liu, Xuechun 2023. Patent licensing and R&D in the presence of firm heterogeneity. PhD Thesis, Cardiff University. Item availability restricted.

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Abstract

Technological development is one of the main determinants of economic growth in the long run. In general, it is achieved by the research and development (R&D) activity and then diffusion of the new technology. This thesis examines both R&D stage and technology diffusion stage from different angles to identify how innovation affects firm competition. Most of the studies on patent licensing and R&D are based on symmetric firms, but we more often see asymmetric firms in the realistic situation. Therefore, firm heterogeneity is an important feature of this thesis. The first main chapter focuses on the diffusion stage of new technology in the presence of asymmetric licensees. That is, given the innovation has already taken place, this chapter aims to find how the asymmetric cost structure affects the most profitable strategy for an outside innovator. Moreover, it also finds that it depends on the type of innovation whether the large firm or small firm has higher incentive to pay for the license. The second main chapter focuses on R&D stage and the firm heterogeneity is characterized by both asymmetric initial production cost and asymmetric R&D spillover rate. Therefore, it aims to find how the firm heterogeneity affects the R&D choices and subsequent market structure. The result shows that the one-way spillover rate drives the small firm to invest more in R&D so that the cost gap is narrowed. The third chapter focuses on the R&D stage in the presence of uncertainty in a multi-period game. It finds the uncertainty of R&D under long-term competition makes two initially symmetric firms grow technological gap instead of evolving neck to neck. Therefore, although the model starts from symmetric firms, it captures asymmetric cases due to uncertain R&D outcomes

Item Type:	Thesis (PhD)
Date Type:	Completion
Status:	Unpublished
Schools:	Business (Including Economics)
Subjects:	H Social Sciences > H Social Sciences (General)
Uncontrolled Keywords:	Innovation; Patent licensing; R&D; Firm heterogeneity; Welfare analysis; R&D spillover; R&D competition; Uncertainty
Date of First Compliant Deposit:	11 July 2023
Last Modified:	11 Jul 2023 15:37
URI:	https://orca.cardiff.ac.uk/id/eprint/160966

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