Exclusive or open? An economic analysis of university intellectual property patenting and licensing strategies

This paper examines the determinants and compares the welfare implications of university intellectual property patenting and licensing strategies. A licensing strategy may be based on varying degrees of exclusivity granted to firms, from open, non-exclusive to exclusive licensing. We thus analyze how the nature of technology invented by the university might affect the choice of patenting (or publishing) and the licensing strategy as well as the performance of the transfer. We consider a model with one university and four firms in two different sectors. We show that if the invention is embryonic and specific, exclusive licensing is the only strategy allowing transferring it to industry. Further, if the invention is generic and embryonic exclusive licensing per field of use is the best way of transferring the invention. Finally, when the invention is mature, publishing is the optimal strategy. An important result is that at the equilibrium of the game, universities may not always automatically choose the strategy which maximizes social surplus.
JEL Codes: O32, O33, O34