تعرفه، صدور مجوز و ساختار بازار

This paper challenges the conventional wisdom that exclusive owners of an advanced technology are always better off when producing as a monopolist than when competing against another firm. Competition against a less-efficient firm weakens the power that a host country can exert on the incumbent in the form of its tariff policy. We show that this gives a motive for a monopolist to license its technology to another foreign firm. A host country gains more from increased competition if it can induce the foreign incumbent to transfer technology to the host country firm. We show that the host country can do so by tariff commitment. We also discuss the implications of bargaining under licensing and Bertrand competition in the product market. Hence, this paper qualifies and extends the recent work of Kabiraj and Marjit [Protecting consumers through protection: The role of tariff-induced technology transfer. European Economic Review 47, 113–124].

Do restrictive trade policies always make the consumers worse-off? In a recent article Kabiraj and Marjit (2003) (henceforth, KM) show that the answer to this question is negative if trade policy affects firms’ strategies such as technology licensing. In particular, they show that protection may make consumers better off if tariff protection induces technology licensing. The present paper extends this line of research and shows that a monopolist foreign firm finds it profitable to license its technology in presence of strategic trade policy. However, whether the foreign firm licenses its technology to a foreign firm or to a domestic firm is ambiguous and may depend on the nature of the domestic policy, i.e., whether the domestic country pre-commits or not to its trade policy. If the monopolist licenses its technology to the potential foreign entrant and the host country sets its tariff after the licensing agreement, the host country's optimal tariff rate will decrease. But if it licenses the technology to the potential host country entrant, it gives the advantage of ‘tariff jumping’, irrespective of whether the host country sets its tariff before or after licensing. We find that, when the host country sets its tariff after licensing, the benefit for the monopolist may be higher if it licenses the technology to the foreign entrant. If the host country sets the tariff before licensing, the monopolist always licenses the technology to the host country entrant. We also show that commitment to the tariff rate by the domestic government increases domestic welfare as compared to no-commitment to the tariff rate. Though our paper is closely related to KM, we differ from them in several important ways. Firstly, they consider technology licensing in a duopolistic market whereas we consider licensing by a monopolist foreign firm and a duopolistic market structure arises as an equilibrium outcome. Moreover, the effect of strategic trade policy on the licensing decision is much weaker in KM. In their model the foreign firm always licenses its technology (i.e., irrespective of the restrictive trade policy) if the variable cost of the domestic firm is up to 80% of the monopoly price, a condition that is quite likely to hold. As in our model the foreign firm would never license its technology under free trade, we show more clearly the effect of an active trade policy. Secondly, we consider contracts that allow for royalties and fixed fees instead of a fixed fee only. Surveys show that the combination of royalty and fixed fee licensing is most prevalent (Rostoker, 1984). Thirdly, we consider licensing not only to a domestic firm but also to a foreign firm and show when it is optimal to license the technology either to the domestic firm or to the foreign firm. The remainder of the paper is organized as follows. The next section derives the basic model of a foreign monopolist. Section 3 considers licensing under no-commitment to the tariff rate while Section 4 considers commitment to the tariff rate. Section 5 discusses the implications of some alternative assumptions. In Section 6 we conclude.

This paper shows that a foreign monopolist has the incentive for creating competition through licensing its technology to a potential domestic or foreign entrant. Whether the foreign incumbent licenses to the foreign or domestic entrant depends on the cost of technology transfer to the domestic entrant and the policy choice of the domestic government. Under Cournot competition, if there is no-commitment by the host government and sufficiently high cost of technology transfer to the domestic entrant, the incumbent licenses the technology to the foreign entrant. Commitment by the domestic government to the tariff rate increases domestic welfare. Positive bargaining power of the licensee affects the incentive for licensing, which, in turn, may affect the incentive for commitment strategy. We also show that the foreign monopolist has the incentive for licensing even under Bertrand competition. But, under Bertrand competition, it is more likely that the domestic country will adopt the no-commitment strategy. It is worth mentioning that we have considered licensing either to a domestic firm or to a foreign firm. However, licensing to both a foreign and a domestic firm could be profitable for the foreign monopolist. If the foreign monopolist finds it optimal to license its technology to both the domestic licensee and the foreign licensee, it still maintains the basic message of this paper, i.e., a foreign monopolist's optimal choice is to create competition through licensing in the presence of strategic trade policy. Further, the foreign monopolist may also have the incentive to license its technology to more than one foreign firm and/or more than one domestic firm. However, if there is significant amount of cost associated with licensing, licensing to a limited number of firms may be optimal. Some of these issues may arise in our future research.