Science Research Management ›› 2016, Vol. 37 ›› Issue (5): 132-140.

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Import taxes, heterogeneity and licensing of foreign firms

Qi Yong, Hou Zemin   

  1. School of Business Administration, Northeastern University, Shenyang 110169, Liaoning, China
  • Received:2014-07-03 Revised:2015-09-06 Online:2016-05-20 Published:2016-05-06

Abstract: This paper analyzes the effect of import taxes and differentiation on the licensing modes choice and social welfare with a differentiated duopoly model in the Stackelberg competition. It shows that fixed-fee can occur if import taxes are high and the goods are very different. Royalty and two-part tariff can increase the profit of foreign enterprise and two-part tariff gain the highest profit. However, three licensing modes may decrease the social welfare under the condition of high import taxes and differentiated goods.

Key words: import taxes, licensing, Stackelberg competition, heterogeneous duopoly enterprise