An Analysis of the Rent Dissipation and Revenue Effect in Technology Licensing
This paper analyzes the interplay between the rent dissipation and revenue effects by focusing on the degree to which the licensed technology represents a licensor’s core activity. We argue that if companies are anticipating the future loss in their market share (Rent Dissipation Effect) that licensing will imply, they would try to overcome or reduce this loss asking for a minimum guaranteed revenue at the time to sign the agreement (Revenue Effect). The analysis revealed that the decision to license valuable technologies are significantly associated with a lower growth on the licensor market share and that licensors try to counter balance this effect by requiring stronger remuneration clauses in the contracts.
Revenue Effect; Markets for Technology; Technology Licensing; Dissipation Effect