Equivalence between fixed fee and ad valorem profit royalty

For an outside innovator with a finite number of buyers the innovation, this paper compares two licensing schemes: (i) fixed fee, in which licensee pays fee to and (ii) ad valorem profit royalty, leaves fraction its innovator. We show these schemes are equivalent that for any licenses puts sale, give same revenue. obtain equivalence result general model minimal structure. It is then applied Cournot oligopoly Finally, duopoly it shown when one incumbent firms rather than outsider, does not hold.