Cross-licensing in a duopoly under network externalities

In this thesis, we deal with the problem of cross-licensing in a duopolistic industry under network externalities. To this aim, we integrate Zhao's (2017) cross-licensing model with network externalities. We show that the difference between the product qualities, the difference between the marginal costs of the duopolistic firms, and also the network intensity influence licensing decisions. In more detail, our findings involve that if the product quality difference of the firms and the network intensity are sufficiently high, then network externality facilitates the licensing decision for both firms; moreover, the increase in the network intensity yields an increase in consumer surplus and social welfare.