Tarun Kabiraj | Indian Statistical Institute, Calcutta (original) (raw)

Papers by Tarun Kabiraj

Opportunities and Challenges in Development, 2019

Arthaniti: Journal of Economic Theory and Practice, 2006

This paper discusses the question of optimal licensing contracts in a Hotelling structure. We sho... more This paper discusses the question of optimal licensing contracts in a Hotelling structure. We show that a royalty equilibrium exists if and only if transport cost lies in a specified interval, but the royalty rate can be higher than the amount of cost saving. While fee licensing only is never profitable, the optimal licensing contract consists of a fee plus royalty. In equilibrium the market is fully covered with monopolistic goods.

In a duopolistic trade model we have shown that a tariff can influence the optimal licensing stra... more In a duopolistic trade model we have shown that a tariff can influence the optimal licensing strategy of the foreign firm. A high tariff will induce fee licensing and a low tariff will result in a royalty licensing. From the viewpoint of the consumers both high tariff and high royalty are distortaionary; hence there is a trade-off between a tariff and a royalty. Then the local government can suitably choose a tariff rate that will induce fee licensing, then consumers' welfare is maximized. In the paper we have used the tools and techniques of game theory and industrial organization literature to the issue of technology licensing and consumers' welfare. We have shown that a tariff on foreign products can be strategically chosen so that the foreign firm transfers its superior technology to a domestic firm under a fee licensing contract and consumers' welfare is maximized.

Group Decision and Negotiation, 2020

We consider interaction of two terror outfits and study possible counter-terrorism (CT) measures,... more We consider interaction of two terror outfits and study possible counter-terrorism (CT) measures, both in the absence and presence of external terror finance. In our paper, external sponsorship with proportional allocation rule, induces strategic interaction and incentivizes more attacks. We provide a theoretical foundation for the ubiquity of defensive counter-terrorism (CT) versus the limited applicability of offensive measures and confidence-building measures (CBMs). Curtailing external sponsorship is always effective in inhibiting terror activity. In fact, targeting external funding may be the most effective CT tool if terror activity is sufficiently low. While CBMs may be more effective in the absence of external sponsorship, defensive CT may be preferable in its presence. However, CBMs may not be as effective in the presence of external sponsorship, as in its absence.

We show that under some conditions it is optimal for the non-innovating south to give patent prot... more We show that under some conditions it is optimal for the non-innovating south to give patent protection for a longer period than the innovating north. However, a cooperative patent agreement involves a larger protection by each country compared to the non-cooperative situation.

Abstract: This note seeks to show that optimal royalty licensing contracts in a Hotelling framewo... more Abstract: This note seeks to show that optimal royalty licensing contracts in a Hotelling framework do not exist when patentee is an insider and the innovation is non-drastic. This proves that the corresponding results of Poddar and Sinha (2004, ER) are not correct. Key words: Insider patentee; non-drastic innovation; royalty licensing.

Acknowledgement: This is a revised version of the paper presented at the seminars at

In an oligopoly industry of k firms (k > 2) with linear demand and identical (constant) averag... more In an oligopoly industry of k firms (k > 2) with linear demand and identical (constant) average cost of production, a bilateral merger is never profitable when all firms choose their quantities simultaneously. In this paper we reexamine the issue when some firms have first-mover advantage. We find that in a leader-follower structure a bilateral merger is always profitable when a leader and a follower merge together and the merged firm behaves like a leader. But, a bilateral merger between leaders or between followers may not be privately profitable.

This paper seeks to examine, in the context of Marjit (1991, Eco. Lett.) and Mukherjee and Marjit... more This paper seeks to examine, in the context of Marjit (1991, Eco. Lett.) and Mukherjee and Marjit (2004, Gr. Dec. Nego.) models, the effect on the choice of R&D organization if the number of research lab is chosen by the firms optimally under R&D cooperation. Given the optimal form of R&D cooperation, the paper further studies the effect of introducing fee licensing under non-cooperative R&D. We show that our results substantially differ from those in the existing literature. The R&D cost, the success probability, and the size of innovation, all these play a crucial role.

We consider a joint venture between a local firm from a less developed country and a foreign mult... more We consider a joint venture between a local firm from a less developed country and a foreign multinational. In a dynamic two period model, we demonstrate that the availability of a new technology could trigger a joint venture breakdown. The outcome may also involve the new technology not being adopted at all. The possibility of joint venture breakdown is greater when the foreign firm has a large discount factor and the investment cost for the new technology is relatively small. Moreover, an upward shift of demand increases the likelihood of joint venture breakdown. On the other hand, neither control, nor bargaining power affects the incentive for joint venture breakdown. However, they do affect the pattern of technology adoption in case the JV survives. Finally, we show that an increase in the demand level could lead to the breakdown of the JV. JEL Classification Numbers: F21, F23, L13, O33. Key-words: Joint venture breakdown, technology adoption, subsidiary, control, bargaining.

Indian economic review, 2005

Operational success of a venture firm essentially depends on the cultural compatibility of the pa... more Operational success of a venture firm essentially depends on the cultural compatibility of the partners. This paper draws attention to the country specific cultural characteristics and partner asymmetry as being the fundamental cause of joint venture instability and break down. Given that one partner has asymmetric information about the type of the other partner, a separating equilibrium is more likely to be the outcome if high state nature is the realization.

This paper discusses licensing agreements between duopolistic firms in a model of horizontal and ... more This paper discusses licensing agreements between duopolistic firms in a model of horizontal and vertical product differentiation. It is shown that a profitable technology transfer deal under a fee contract can be signed if and only if the quality differential is sufficiently larger than the technology differential. Technology transfer under a royalty contract, however, does not require such a condition. The paper also examines the possibility of trading a better technology for a superior quality. Finally, we show that the existence of a sufficiently high trading cost (in an open economy) can always make a fee transfer mutually profitable. The paper also provides a welfare analysis.

Economics Bulletin, 2014

This paper seeks to show that even though a product market competitor holds the least cost input ... more This paper seeks to show that even though a product market competitor holds the least cost input production technology, it may outsource its input production to an independent input producer and buy inputs from the firm at a higher price instead of producing inputs in-house for itself. Technology transfer in the form of patent sale acts as a commitment. Assuming Cournot competition in the product market the paper shows that such an outsourcing occurs when the initial technological gap between the input producing firms is small. Under such strategic outsourcing, however, consumer welfare as well as social welfare goes down.

A firm faces a choice between outsourcing a crucial input and producing it inhouse within the ver... more A firm faces a choice between outsourcing a crucial input and producing it inhouse within the vertical structure. This paper discusses strategic motives behind the outsourcing decision.

We consider the possibility of forming a joint venture (JV) between a local firm and a foreign mu... more We consider the possibility of forming a joint venture (JV) between a local firm and a foreign multinational in a situation when there is no current gain from such an arrangement. In the presence of policy uncertainty and threat of entry, a current period formation of JV with the multinational, which is expected to come up with a superior technology in the future, gives a strategic advantage to the incumbent.

The paper studies incentives for cooperative research vis-a-vis non-cooperative research under in... more The paper studies incentives for cooperative research vis-a-vis non-cooperative research under incomplete information when the R&D outcome is stochastic and continuously distributed with a given mean and a constant variance. We show that the non-cooperative R&D incentive increases with the variance of the R&D outcome. And this result does not depend on the nature of the product market competition.

This paper studies R&D incentives of a non-producing firm in an upstream-downstream structure for... more This paper studies R&D incentives of a non-producing firm in an upstream-downstream structure for three types of technologies, viz., upstream technology, downstream technology and common technology (which is usable in both streams). We consider both the cases of exogenous and endogenous innovation. In case of common technology innovation, we have also studied the effect of spillovers. In particular, we show that transfer to only upstream firm can be optimal. We have contrasted the results with those when an insider (i.e., upstream or downstream) firm is engaged in research. The size of the innovation can be larger compared to third firm R&D case. While there can be a conflict between private and socially optimal choice of technology, we show that socially optimal choice is implementable.

Opportunities and Challenges in Development, 2019

Arthaniti: Journal of Economic Theory and Practice, 2006

This paper discusses the question of optimal licensing contracts in a Hotelling structure. We sho... more This paper discusses the question of optimal licensing contracts in a Hotelling structure. We show that a royalty equilibrium exists if and only if transport cost lies in a specified interval, but the royalty rate can be higher than the amount of cost saving. While fee licensing only is never profitable, the optimal licensing contract consists of a fee plus royalty. In equilibrium the market is fully covered with monopolistic goods.

In a duopolistic trade model we have shown that a tariff can influence the optimal licensing stra... more In a duopolistic trade model we have shown that a tariff can influence the optimal licensing strategy of the foreign firm. A high tariff will induce fee licensing and a low tariff will result in a royalty licensing. From the viewpoint of the consumers both high tariff and high royalty are distortaionary; hence there is a trade-off between a tariff and a royalty. Then the local government can suitably choose a tariff rate that will induce fee licensing, then consumers' welfare is maximized. In the paper we have used the tools and techniques of game theory and industrial organization literature to the issue of technology licensing and consumers' welfare. We have shown that a tariff on foreign products can be strategically chosen so that the foreign firm transfers its superior technology to a domestic firm under a fee licensing contract and consumers' welfare is maximized.

Group Decision and Negotiation, 2020

We consider interaction of two terror outfits and study possible counter-terrorism (CT) measures,... more We consider interaction of two terror outfits and study possible counter-terrorism (CT) measures, both in the absence and presence of external terror finance. In our paper, external sponsorship with proportional allocation rule, induces strategic interaction and incentivizes more attacks. We provide a theoretical foundation for the ubiquity of defensive counter-terrorism (CT) versus the limited applicability of offensive measures and confidence-building measures (CBMs). Curtailing external sponsorship is always effective in inhibiting terror activity. In fact, targeting external funding may be the most effective CT tool if terror activity is sufficiently low. While CBMs may be more effective in the absence of external sponsorship, defensive CT may be preferable in its presence. However, CBMs may not be as effective in the presence of external sponsorship, as in its absence.

We show that under some conditions it is optimal for the non-innovating south to give patent prot... more We show that under some conditions it is optimal for the non-innovating south to give patent protection for a longer period than the innovating north. However, a cooperative patent agreement involves a larger protection by each country compared to the non-cooperative situation.

Abstract: This note seeks to show that optimal royalty licensing contracts in a Hotelling framewo... more Abstract: This note seeks to show that optimal royalty licensing contracts in a Hotelling framework do not exist when patentee is an insider and the innovation is non-drastic. This proves that the corresponding results of Poddar and Sinha (2004, ER) are not correct. Key words: Insider patentee; non-drastic innovation; royalty licensing.

Acknowledgement: This is a revised version of the paper presented at the seminars at

In an oligopoly industry of k firms (k > 2) with linear demand and identical (constant) averag... more In an oligopoly industry of k firms (k > 2) with linear demand and identical (constant) average cost of production, a bilateral merger is never profitable when all firms choose their quantities simultaneously. In this paper we reexamine the issue when some firms have first-mover advantage. We find that in a leader-follower structure a bilateral merger is always profitable when a leader and a follower merge together and the merged firm behaves like a leader. But, a bilateral merger between leaders or between followers may not be privately profitable.

This paper seeks to examine, in the context of Marjit (1991, Eco. Lett.) and Mukherjee and Marjit... more This paper seeks to examine, in the context of Marjit (1991, Eco. Lett.) and Mukherjee and Marjit (2004, Gr. Dec. Nego.) models, the effect on the choice of R&D organization if the number of research lab is chosen by the firms optimally under R&D cooperation. Given the optimal form of R&D cooperation, the paper further studies the effect of introducing fee licensing under non-cooperative R&D. We show that our results substantially differ from those in the existing literature. The R&D cost, the success probability, and the size of innovation, all these play a crucial role.

We consider a joint venture between a local firm from a less developed country and a foreign mult... more We consider a joint venture between a local firm from a less developed country and a foreign multinational. In a dynamic two period model, we demonstrate that the availability of a new technology could trigger a joint venture breakdown. The outcome may also involve the new technology not being adopted at all. The possibility of joint venture breakdown is greater when the foreign firm has a large discount factor and the investment cost for the new technology is relatively small. Moreover, an upward shift of demand increases the likelihood of joint venture breakdown. On the other hand, neither control, nor bargaining power affects the incentive for joint venture breakdown. However, they do affect the pattern of technology adoption in case the JV survives. Finally, we show that an increase in the demand level could lead to the breakdown of the JV. JEL Classification Numbers: F21, F23, L13, O33. Key-words: Joint venture breakdown, technology adoption, subsidiary, control, bargaining.

Indian economic review, 2005

Operational success of a venture firm essentially depends on the cultural compatibility of the pa... more Operational success of a venture firm essentially depends on the cultural compatibility of the partners. This paper draws attention to the country specific cultural characteristics and partner asymmetry as being the fundamental cause of joint venture instability and break down. Given that one partner has asymmetric information about the type of the other partner, a separating equilibrium is more likely to be the outcome if high state nature is the realization.

This paper discusses licensing agreements between duopolistic firms in a model of horizontal and ... more This paper discusses licensing agreements between duopolistic firms in a model of horizontal and vertical product differentiation. It is shown that a profitable technology transfer deal under a fee contract can be signed if and only if the quality differential is sufficiently larger than the technology differential. Technology transfer under a royalty contract, however, does not require such a condition. The paper also examines the possibility of trading a better technology for a superior quality. Finally, we show that the existence of a sufficiently high trading cost (in an open economy) can always make a fee transfer mutually profitable. The paper also provides a welfare analysis.

Economics Bulletin, 2014

This paper seeks to show that even though a product market competitor holds the least cost input ... more This paper seeks to show that even though a product market competitor holds the least cost input production technology, it may outsource its input production to an independent input producer and buy inputs from the firm at a higher price instead of producing inputs in-house for itself. Technology transfer in the form of patent sale acts as a commitment. Assuming Cournot competition in the product market the paper shows that such an outsourcing occurs when the initial technological gap between the input producing firms is small. Under such strategic outsourcing, however, consumer welfare as well as social welfare goes down.

A firm faces a choice between outsourcing a crucial input and producing it inhouse within the ver... more A firm faces a choice between outsourcing a crucial input and producing it inhouse within the vertical structure. This paper discusses strategic motives behind the outsourcing decision.

We consider the possibility of forming a joint venture (JV) between a local firm and a foreign mu... more We consider the possibility of forming a joint venture (JV) between a local firm and a foreign multinational in a situation when there is no current gain from such an arrangement. In the presence of policy uncertainty and threat of entry, a current period formation of JV with the multinational, which is expected to come up with a superior technology in the future, gives a strategic advantage to the incumbent.

The paper studies incentives for cooperative research vis-a-vis non-cooperative research under in... more The paper studies incentives for cooperative research vis-a-vis non-cooperative research under incomplete information when the R&D outcome is stochastic and continuously distributed with a given mean and a constant variance. We show that the non-cooperative R&D incentive increases with the variance of the R&D outcome. And this result does not depend on the nature of the product market competition.

This paper studies R&D incentives of a non-producing firm in an upstream-downstream structure for... more This paper studies R&D incentives of a non-producing firm in an upstream-downstream structure for three types of technologies, viz., upstream technology, downstream technology and common technology (which is usable in both streams). We consider both the cases of exogenous and endogenous innovation. In case of common technology innovation, we have also studied the effect of spillovers. In particular, we show that transfer to only upstream firm can be optimal. We have contrasted the results with those when an insider (i.e., upstream or downstream) firm is engaged in research. The size of the innovation can be larger compared to third firm R&D case. While there can be a conflict between private and socially optimal choice of technology, we show that socially optimal choice is implementable.