Fee Versus Royalties in General Cost functions

Which is better off for the patentee to license its technology by fixed fee or unit royalties? Kamien and Tauman [8] showed that the fixed fee scheme brings greater private value of the patent in the linear model. We extend their analysis into a general model. Then, the simple fact that the model allows a increasing marginal cost supports the unit royalties scheme. More concretely, the unit royalties scheme is superior to the fixed fee scheme when the number of firms is large.licensing, Cournot competition, convex cost, limit theorem

Extended producer responsibility in oligopoly

I investigate the optimal environmental tax under a policy based on extended producer responsibility (EPR) in oligopoly markets. I introduce the recycling market and explicitly consider how these policies affect the incentive for recycling. I derive the optimal tax rule, which depends on the weighted sum of the markup in the product market and the markdown in the recycling market. In contrast to the existing works that emphasize that the optimal tax rate is lower than the marginal external damage, I find that the optimal tax rate can be higher than the marginal external damage.

Optimal Environmental Policy for Waste Disposal and Recycling When Firms Are Not Compliant

We investigate, considering disposal and recycling activities after the consumption of products, the models that explicitly incorporate both the product market and the recycling market. In the field, the deposit-refund (D-R) policy has been discussed as an ideal policy to internalize disposal cost, which can result in the realization of the first-best policy. However, the possibility of firmsf illegal disposal has been neglected. We introduce monitoring cost to prevent firms from disposing of collected residuals illegally and induce the second-best D-R policy. We find that the monitoring problem for firms brings about a variety in the optimal level of the refunds (which is typically be smaller than the first best level). Furthermore, we investigate an alternative policy that requires producers to take back residuals, and show how this policy works equivalently to the second-best D-R policy by applying the theory of tradable emission permits market. We find that the second-best system of this policy is the combination of the take-back requirement depending on the amount of each firmfs outputs and initial exemption from that requirement.Deposit, Refund, Monitoring, IllegalWaste Disposal, Take-back requirement, Tradable rights

What role should public enterprises play in free-entry markets?

We investigate a desirable role of public enterprise in mixed oligopoly in free-entry markets. We compare the following three cases: (i) a public firm produces before private firms (public leadership), (ii) all firms produce simultaneously (Cournot), (iii) a public firm produces after private firms (private leadership). We find that private leadership is best and public leadership is worst, in contrast to the cases without entries and exits of private firms. We also investigate the welfare implication of privatization. We find that some important results shown by existing works do not hold under private leadership.free-entry market, Stackelberg, Cournot, mixed oligopoly, commitment

How Many Firms Should Be Leaders? Beneficial Concentration Revisited

We investigate the relationship between the Herfindahl-Hirschman Index (HHI) and welfare. First, we discuss the model wherein m leaders and N - m followers compete. Daughety (1990) finds that under linear demand and constant marginal cost, the Stackelberg model yields larger welfare and HHI than the Cournot model. Thus, he demonstrates that beneficial concentration occurs. We find that this always occurs under general cost and demand functions when m is sufficiently large, but does not always occur when m is small. Next, we consider the free entry of followers, and find that beneficial concentration always occurs regardless of m. In particular, the more persistent the leadership, the more likely it is to be beneficial.HHI, beneficial concentration, leadership, free entry market