We study inventors' strategic licensing behaviour when there are two generations of technology. The innovations are sequential, with the second invention built on the first. We show that if the market size is large and if the second innovation is relatively significant, the early inventor licenses by royalty and the second-generation inventor licenses by a fixed fee. The results suggest that royalty licensing may be more common in industries characterized by a high degree of cumulativeness in...[Show more]
Items in Open Research are protected by copyright, with all rights reserved, unless otherwise indicated.