Step by step: The benefits of stage-based R&D licensing contracts

• Main Authors: Crama, Pascale, DE REYCK, Bert, Degraeve, Zeger
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2013
• Subjects: Research and development; Innovation; Contract design; Asymmetric information; Industries; Pharmaceutical; Operations and Supply Chain Management; Technology and Innovation
• Online Access: https://ink.library.smu.edu.sg/lkcsb_research/3228; https://ink.library.smu.edu.sg/context/lkcsb_research/article/4227/viewcontent/Crama2013EJORStepbyStep_AFV.pdf
• Institution: Singapore Management University

We examine how a licensor can optimally design licensing contracts for multi-phase R&D projects when he does not know the licensee’s project valuation, leading to adverse selection, and cannot enforce the licensee’s effort level, resulting in moral hazard. We focus on the effect of the phased na...