On the diffusion of competing innovations
This paper examines how discounting shapes the probability that a product innovator grants an innovation for licensing to a firm interested in this innovation, when innovations are perfect substitute and firms are competitive. The discounting refers, of course, to the potential profit of the innovator from offering its innovation for licensing. The analysis takes place within the context of game theory. It is found out that more competition in the market for the innovation may induce lower innovation diffusion and lower welfare in the downstream market.
scientific article; zbMATH DE number 7338100