Journal of Economics

, Volume 99, Issue 3, pp 267–276 | Cite as

Location equilibrium with asymmetric firms: the role of licensing

  • Toshihiro Matsumura
  • Noriaki Matsushima
  • Giorgos StamatopoulosEmail author


It is known that if exogenous cost heterogeneities between the firms in a spatial duopoly model are large, then the model does not have a pure-strategy equilibrium in location choices. It is also known that when these heterogeneities are stochastically determined after firms choose their locations, spatial agglomeration can appear. To tackle these issues, the current paper modifies the spatial framework by allowing firms to exchange the cost-efficient production technology via royalties. It is shown that technology transfer guarantees the existence of a location equilibrium in pure strategies and that maximum differentiation appears in the market.


Location model Asymmetric firms Licensing Royalty R&D 

JEL Classification

D43 D45 


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Copyright information

© Springer-Verlag 2009

Authors and Affiliations

  • Toshihiro Matsumura
    • 1
  • Noriaki Matsushima
    • 2
  • Giorgos Stamatopoulos
    • 3
    Email author
  1. 1.Institute of Social ScienceUniversity of TokyoTokyoJapan
  2. 2.Institute of Social and Economic ResearchOsaka UniversityOsakaJapan
  3. 3.Department of EconomicsUniversity of CreteRethymnoGreece

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