Abstract:

In recent decades， with the in-depth development of technological progress and economic globalization， transnational licensing has become a driving force for the development of China. Technology licensing can not only improve the technological level of enterprises and adjust existing products， but also promote enterprise innovation to achieve higher levels of productivity. In this context， the following three questions are studied： 1） How should the licensor choose a transnational licensing contracts？ 2） What is the relationship between the introduction of new products by the licensee and the multinational technology licensing？ 3） Whether the licensor and the licensee can achieve Pareto improvement？In this paper， the optimal design of licensing contracts and strategies are investigated for introducing new products in a system that comprises a foreign innovator and a domestic company. Two game models before and after the introduction of the new product is established. The main work is divided into four parts. Firstly， optimal licensing contracts are proposed and the optimal pricing and R&D decisions are analyzed through solving the model， respectively. Secondly， the foreign innovator’s optimal licensing contracts selection and the nature of the licensing contract are analyzed. To underscore the significance of licensing contracts， the profit shares of companies under various types of contracts are compared. Thirdly， the new product introduction strategy of domestic company and the impact of new product introduction on the system equilibrium are analyzed. Lastly， the potential for Pareto improvement between the foreign innovator and domestic company is investigated， extending the original model to accommodate this analysis.The results show that， in the transnational technology licensing cooperation， the optimal licensing contracts includes fixed-fee licensing contract and two-part tariff licensing contract. Among them， the patent owner can obtain more profits under a fixed fee contract. This conclusion is one of the main innovations of this paper， which theoretically proves the existence of different forms of transnational licensing contracts. Moreover， from the perspective of domestic company， the domestic company will have the incentive to introduce new products. Its value is mainly to reduce the inequality in the distribution of profit shares between foreign innovator and domestic company， and to reduce the proportion of technology royalties. In addition， the system equilibrium will be affected by asymmetric information， including the form of licensing contracts and the profits of individual companies. It can be seen that foreign innovator have lost profits， domestic company can obtain additional information rent， and the two companies can achieve Pareto improvement under certain condition. Finally， based on the model expansion analysis， it can also be found that under different market conditions， the domestic company always have the motivation to choose high-end product introduction strategies or to introduce high-end and low-end products at the same time.In summary， under the trend of economic globalization， a reasonable and effective transnational licensing mechanism is not only an inevitable requirement for promoting high-quality economic development， but also an inherent requirement for expanding opening up. The theoretical analysis results obtained in this paper can provide a theoretical basis and reference for the practice of transnational technology licensing.

Key words: transnational technology licensing, new product introduction, licensing contract, information asymmetry