The incidence of cross-licensing: A theory and new evidence on the firm and contract level determinants |
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Authors: | Sadao Nagaoka Hyeog Ug Kwon |
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Institution: | a Institute of Innovation Research, Hitotsubashi University, 2-1 Naka Kunitachi, Tokyo, Japan b College of Economics, Nihon University, 1-3-2 Misaki, Chiyoda, Tokyo, Japan |
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Abstract: | This paper examines the firm and contract level determinants of the incidence of cross-licensing among manufacturing firms. It develops a simple stochastic theory explaining such incidence, which implies that cross-licensing, compared with unilateral licensing, is more prevalent between large and symmetric firms under a reasonable set of assumptions. We find strong empirical support to these implications, based on a new dataset of more than 1100 licensing contracts by Japanese manufacturing firms. We also find that the incidence of cross-licensing is higher when the contract covers only patent than when it covers only know-how, consistent with the theory. The licensing probability between two firms depends primarily on the size of a potential licensor, which, according to the theory, is consistent with the fact that a licensor is larger than a licensee on the average. |
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Keywords: | O34 L20 |
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