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Mathematical Problems in Engineering
Volume 2015 (2015), Article ID 179369, 17 pages
Research Article

Technology Licensing Strategy for Network Product in a Service Industry

1College of Economics and Management, Huazhong Agricultural University, Wuhan 430070, China
2School of Management, Henan University of Science and Technology, Luoyang 471023, China
3School of Business, Shandong Yingcai University, Jinan 250104, China
4College of Science, Tianjin University of Technology, Tianjin 300384, China

Received 15 August 2014; Revised 15 October 2014; Accepted 2 November 2014

Academic Editor: Bin Shen

Copyright © 2015 Xianpei Hong et al. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.


Technology licensing has gained significant attention in literature and practice as a rapid and effective way to improve firm’s capability of technology innovation. In this paper, we investigate a duopolistic service provider competition market, where service providers develop and sell a kind of network product. In this setting, we analyze the innovating service provider’s four licensing strategies: no licensing, fixed fee licensing, royalty licensing, and two-part tariff licensing. The literature suggests that when the network products can be completely substituted, two-part tariff licensing is the optimal strategy of the innovating service provider. We find that when the network products cannot be completely substituted, two-part tariff licensing is not always optimal. The degree of the product differentiation, the intensity of the network effects, and the R&D cost of the potential licensee play a key role in determining the innovating service provider’s optimal licensing strategies.