Monopoly,licensing or sharing: Patent operation strategy for high-tech firms with random yield
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F274

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    Abstract:

    This paper investigates the patent operation strategies for the upstream high-tech firms with random yield in supply chains. A supply chain with one upstream supplier and one downstream manufacturer is studied under three common patent strategies: monopoly,licensing and sharing. Under the monopoly strategy,the upstream supplier produces the high-tech components himself for the downstream manufacturer and suffers from the random yield. Under the licensing strategy,the supplier does not produce the components but authorizes the technology to a reliable foundry by charging a patent license fee. Under the sharing strategy,the supplier shares the patent to the foundry to insure that the shortfall order can be made up by the foundry after the supplier’s random yield is realized. The results show that when the market potential faced by the manufacturer is small,the patent licensing is the dominant strategy for the high-tech supplier. When the market potential is large,the high-tech supplier chooses the monopoly strategy if its reliability is low and the sharing strategy if the opposite is the case. Compared with the decentralized decision scenario,the dominance interval of the licensing strategy is enlarged but that of the monopoly strategy is shrunk in the centralized decision scenario. This study also shows that there exists a distortion between the optimal patent strategy for the supplier and that for the whole supply chain,and that the degree of distortion will be enlarged by the decrease of start-up cost but weakened by the increase of supply risk.

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  • Online: October 25,2021
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