Ex-ante licensing in sequential innovations

Stefano Comino, Fabio M. Manenti, Antonio Nicolò

Research output: Contribution to journalArticlepeer-review


The theoretical literature on the cumulative innovation process has emphasized the role of ex-ante licensing - namely, licensing agreements negotiated before the follow-on innovator has sunk its R&D investment - in mitigating the risk of hold-up of future innovations. In this paper, we consider a patent-holder and a follow-on innovator bargaining over the licensing terms in a context where the former firm is unable to observe the timing of the R&D investment of the latter. We show that the possibilities of restoring the R&D incentives by setting the licensing terms appropriately are severely limited. © 2011 Elsevier Inc.
Original languageEnglish
Pages (from-to)388-401
Number of pages13
JournalGames and Economic Behavior
Issue number2
Publication statusPublished - Nov 2011


  • Information acquisition
  • Intellectual property
  • Licensing
  • Patents
  • Sequential innovation


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