Technology transfer in mixed oligopolies: The role of cooperatives

Abstract This paper develops a sequential game‐theoretic model of technology licensing with heterogeneous firms and consumers in a mixed oligopoly to systematically analyze the optimal licensing decision of the cooperative and the market and welfare impacts of cooperative involvement in the licensing of cost‐reducing process innovations. Analytical results show that the organizational form does matter in technology licensing; cooperative behavior differs from that of its investor‐owned counterparts yielding significantly different equilibrium outcomes in mixed oligopolies where the cooperative is the licensor of the process innovation involved. While our analysis focuses on cost‐reducing process innovations, our results are more general and hold also for quality‐enhancing product innovations.