On the superiority of fixed fee over auction in asymmetric markets
G Stamatopoulos, T Tauman - Games and Economic Behavior, 2009 - Elsevier
It is well known that selling licenses for the use of a cost-reducing innovation by auction
yields a higher revenue compared to fixed fee in a symmetric Cournot industry. In this note
we show that this result can be reversed in an asymmetric Cournot industry, ie, the fixed fee
policy can generate a strictly higher revenue than the auction policy in an industry where
prior to the innovation firms are cost-asymmetric.
yields a higher revenue compared to fixed fee in a symmetric Cournot industry. In this note
we show that this result can be reversed in an asymmetric Cournot industry, ie, the fixed fee
policy can generate a strictly higher revenue than the auction policy in an industry where
prior to the innovation firms are cost-asymmetric.
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