We use a duopoly to show how the possibility of licensing ex post R&D affects the decision on R&D organization. We show that whether licensing ex post R&D affects the incentive for doing cooperative R&D depends on the nature of cooperative R&D. If the firms do cooperative R&D to avoid duplication in R&D process then the possibility of licensing ex post R&D may influence the decision on R&D orga...

The authors present two classroom experiments on technology licensing. first experiment introduces the concept of royalty stacking. Students learn that noncooperative pricing royalties for complementary intellectual property rights leads to a double-marginalization effect. Cooperation solves problem and is welfare-improving. second students cross-licensing. It shows reciprocal payments dampen c...