Tariff Induced Fee Licensing and Consumers’ Welfare

In a Cournot duopoly with one foreign firm and one domestic firm we show that a tariff on foreign products can be an effective instrument to influence the licensing strategy of the foreign firm. Under free trade technology transfer occurs with a royalty contract, but a suitably designed tariff rate can induce the foreign firm transfer its superior technology to the domestic firm under the fee contract where consumers’ welfare is maximized and social welfare is larger. Such a policy appears to be catchy from the viewpoint of a political party in powe

Strategic Outsourcing with Technology Transfer

We analyze the outsourcing decision of a firm for a key input of a final good production to an independent input supplier even though the firm has an option of producing that key input in-house at a lower cost with a better technology. We find that for smaller technology gap with the independent input supplier the firm would outsource and for larger technology gap it would produce the input in-house for itself and for its rivals. The outsourcing occurs in order to take advantage of its sale of superior technology to the independent input supplier at a high payment although it involves a high price for the input to be acquired from the monopoly input supplier. Though the firm gains from strategic outsourcing, consumers’ welfare as well as social welfare goes down.outsourcing; technology transfer; vertical structure; competition; welfare

Strategic Under-utilization of Patents and Entry Deterrence: The Case of Pharmaceutical Industry

This paper seeks to explain why some pharmaceutical companies are observed to withdraw their products before patents are expired and simultaneously introduce new patented (competing) products. Given the specific nature of drug markets, the companies in fact increase the entry cost of the potential generic drug manufacturers and thereby lessen competition for new drugs. The paper determines the optimal date of withdrawing the product and studies comparative static effects of the change of parameters underlying the model.Patent protection; patent expiry; pharmaceutical industries; generic drugs; entry cost.

External Sponsorship and Counter-Terrorism

We consider interaction of two terror outfits and study possible counter-terrorism (CT) measures, both in the absence and presence of external terror finance. In our paper, external sponsorship with proportional allocation rule, induces strategic interaction and incentivizes more attacks. We provide a theoretical foundation for the ubiquity of defensive counter-terrorism (CT) versus the limited applicability of offensive measures and confidence-building measures (CBMs). Curtailing external sponsorship is always effective in inhibiting terror activity. In fact, targeting external funding may be the most effective CT tool if terror activity is sufficiently low. While CBMs may be more effective in the absence of external sponsorship, defensive CT may be preferable in its presence. However, CBMs may not be as effective in the presence of external sponsorship, as in its absence

On the Choice of R&D Organization

This paper seeks to examine, in the context of Marjit (1991, Eco. Lett.) and Mukherjee and Marjit (2004, Gr. Dec. Nego.) models, the effect on the choice of R&D organization if the number of research lab is chosen by the firms optimally under R&D cooperation. Given the optimal form of R&D cooperation, the paper further studies the effect of introducing fee licensing under non-cooperative R&D. We show that our results substantially differ from those in the existing literature. The R&D cost, the success probability, and the size of innovation, all these play a crucial role

Terrorist Inter-Group Cooperation and Terror Activity

The paper shows that in the absence of external sponsorship, strategic cooperation between two outfits has no impact on terror activity, if neither outfit is resource-constrained a priori. If only one outfit is resource-constrained a priori, inter-group cooperation increases terror activity if and only if there is sufficient resource-asymmetry between the outfits. Further, if both outfits are resource-constrained a priori, then cooperation may increase or decrease terror activity, depending on parametric asymmetries. Finally, it is demonstrated that while cooperation can neutralize the impact of strategic external sponsorship on terror activity and thereby remove the incentive for its provision, there is always some external sponsorship mechanism which can be utilized to enhance terror activity

Technological Asymmetry, Externality, and Merger: The Case of a Three-Firm Industry

We construct a model of three firms oligopoly with homogeneous goods and portray situations where firms fail to merge into monopoly. although such a merger maximizes aggregate profits. The degree of technological asymmetry and the effects of externalities determine the outcome via their effects on the profitability of a bilateral merger. There are situations when an inefficient firm. that cannot survive in a Cournot competition. obtains a positive payoff in the grand coalition. There are also cases when the efficient firm has a disadvantage to bargain

Tariff Induced Fee Licensing and Consumers’ Welfare

In a Cournot duopoly with one foreign firm and one domestic firm we show that a tariff on foreign products can be an effective instrument to influence the licensing strategy of the foreign firm. Under free trade technology transfer occurs with a royalty contract, but a suitably designed tariff rate can induce the foreign firm transfer its superior technology to the domestic firm under the fee contract where consumers’ welfare is maximized and social welfare is larger. Such a policy appears to be catchy from the viewpoint of a political party in powe

R&D incentives with uncertain probability of success

A firm’s decision to invest in R&D depends on a number of factors like availability of funds, extent of R&D spillovers, market structure, and success probability. However, probability of success depends, to a large extent, on factors endogenous to a firm. This means, success probability can be known to the firm undertaking R&D investment, not to the rivals, hence there is incomplete information about probability of success in R&D. There are also uncertainties about rival’s R&D decision and R&D status. In a duopoly we show that there is a non-monotone relation between R&D incentives and the level of information