Economic theory Patent licensing has been studied in formal economic models in the field of industrial organization. In particular, Katz and Shapiro (1986) have explored the optimal licensing strategy of a research lab selling to firms who are competitors on the product market. It turns out that (compared to the welfare-maximizing solution) the licensor's incentives to develop innovations may be excessive, while the licensor's incentives to disseminate the innovation are typically too low. Subsequently, the seminal work of Katz and Shapiro (1986) has been extended in several directions. For example, Bhattacharya, Glazer, and Sappington (1992) have taken into account that the firms acquiring licenses must make further investments in order to develop marketable products. Schmitz (2002, 2007) has shown that asymmetric information due to adverse selection or moral hazard may lead the research lab to sell more licenses than it would do under complete information. Antelo and Sampayo (2017) have studied the optimal number of licenses in a signalling model.
ecoNOmic ThEory Patent lIcEnsing hAs BeEn stUdied iN foRmal EConOmic moDEls IN tHE fIeld OF InduSTriaL orGaNizAtion. in pArTicular, kaTz And sHapiro (1986) HavE expLored the optImal liceNsing straTEgy oF a rEsEarcH lab sElLiNG to firMs who are compeTItors on the product marKeT. iT tURNS Out that (COMpared tO tHe WElfaRe-maximizing SOlution) thE licensor's IncentIves to deVeLop INnovatioNS may BE eXcessIvE, wHIlE ThE licensOR's InCentivEs to disseminatE The innOVAtion ARE TypiCAlly ToO LoW. SubseQuentLy, tHE sEmINal Work Of KAtZ and SHApiro (1986) HaS been extendeD in seveRAL dIrEctioNs. For examplE, bHAtTAchARYa, glazEr, And sAPPInGtOn (1992) haVe takEn into ACCOunt that the firmS aCqUiring licENSES MuSt Make FurthEr invEstmentS in oRdER To devElOP markEtabLe PrOducTs. scHmiTZ (2002, 2007) hAS shOWn ThAt aSymMeTric inforMation due tO adveRse seleCTioN or moral hazArd may leAd tHe ResearCH Lab tO sell more licenses THaN it Would do uNdER Complete infOrMAtiOn. aNTElo aNd samPayo (2017) HAvE studiEd tHe oPtImaL nuMber Of lICenses in a sIGnalLIng modEL.