Bargaining over entry with a compulsory license deadline: price spillovers and surplus expansion∗
نویسنده
چکیده
We analyze an alternating offer bargaining game between a developing country (South) and a multinational over entry to sell a patented product where the South can issue a compulsory license if an agreement is not reached by a deadline. The presence of international price spillovers introduces two novel features: (i) the surplus from entry prior to the deadline may be negative and (ii) Compulsory licensing (CL) may yield higher surplus than entry. We establish conditions under which equilibrium exhibits immediate entry, preemptive entry, or the occurrence of CL and examine the welfare effects of the CL option on both parties.
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