Research On Enterprise's Technology Licensing And The Incentive For Government R&D Subsidy

With the development of economic globalization, the competition between enterprises has become gradually intensive. It is a matter of success and failure for enterprises, especially for high-Tec ones, whether they possess their own core technology. Compared with the western countries, our country has obtained tremendous achievements during the decades of open-up, but a large gap still exists in technology innovation. How to shorten the gap is the important topic that our government and enterprises are facing, and it is also a problem discussed in the academy. According to the theories of economic growth, technology innovation is the source of the social progress and economic development. The enterprises are the subjects of the technology innovation. Therefore, it is highly regarded by the government to encourage enterprises to carry on technology innovation. To encourage enterprises to implement technique innovation, many countries adopt R&D subsidy policy to the innovative enterprises. The theories researchers have paid much attention to the impact of R&D subsidy policy on enterprises'R&D behaviors.This paper establishes a four-stage R&D rivalry oligopoly model with R&D spillovers in outputs, and analyzes the effects of R&D spillovers and bargaining power upon the licensing gain between firms on optimal R&D subsidy policy under the two different licensing strategies. In fixed-fee licensing,we show that when only a firm innovates, there is no incentive for the government to subsidize the firm's R&D, and when both firms innovates , a government's R&D policy crucially depends on its domestic firm's bargaining power upon the licensing gain. If the R&D spillover is smaller than one half, when the firm's bargaining power is larger than the other, the government will subsidize its domestic firm's R&D, while it will impose a tax if the firm's bargaining power is smaller than the other; If the R&D spillover equals one half, for the licensee, when the licensor has not complete bargaining power, the licensee's government will subsidize its R&D. Otherwise, the licensee's government will stay laissez-faire. For the licensor, when it has not complete bargaining power on licensing gain, its government will impose a tax on it. Otherwise, its government will stay laissez-faire; if the R&D spillover is more than one half, both governments will subsidize R&D investment by their domestic firms.In royalty licensing, we show that when only a firm innovates, there is no incentive for the governments to subsidize its firms'R&D, and when both firms innovates , if the R&D spillover is smaller than one half, as far as the licensee is concerned, its government will not subsidize it regardless of its'bargaining power upon the licensing gain, but for the licensor, when it's bargaining power is greater than the other, the government will subsidize its domestic firm's R&D, while it will impose a tax if the firm's bargaining power is smaller than the other; If the R&D spillover equals one half, just like the results in fixed-fee licensing ,for the licensee, when the licensor has not complete bargaining power, licensee's government will subsidize its R&D. Otherwise, the licensee's government will stay laissez-faire. For the licensor, when it has not complete bargaining power on licensing gain, its government will impose a tax on it. Otherwise, its government will stay laissez-faire; if the R&D spillover is more than one half, both governments will subsidize R&D investment by their domestic firms.