Optimal licensing of agricultural patents: Fees versus royalties

Di Fang, Timothy Richards, Bradley J. Rickard

Research output: Contribution to journalArticlepeer-review

6 Scopus citations


We develop a theoretical model of optimal licensing schemes for quality-improving innovations. We consider an oligopolistic market where two downstream firms compete in price and the upstream innovator holds a technology that may create differentiation between the products. Our results show that non-exclusive licensing performs better than exclusive licensing under both fixed fees and royalties and that the preferred contract consists of fixed fees only. We also find that the innovator's license revenue depends on the magnitude of the innovation so there is a greater reward to the innovator's institution if the innovation is large.

Original languageEnglish (US)
Pages (from-to)1-22
Number of pages22
JournalJournal of Agricultural and Resource Economics
Issue number1
StatePublished - Jan 1 2015


  • Agricultural innovation
  • Horticulture
  • Licensing
  • Patents
  • Price competition
  • Royalties

ASJC Scopus subject areas

  • Animal Science and Zoology
  • Agronomy and Crop Science
  • Economics and Econometrics


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