Technology is unevenly distributed across countries, thus constituting an entry barrier. Under several simplifying assumptions, technology licensing strategies among incumbent and entrant firms in the intermational context are analyzed. First, in a model with two monopolistic firms, the conditions for licensing to occur are elaborated as a function of the costs of the two firms. Licensing is likely to occur only when the entrant has a more competitive cost position than the incumbent to compensate for the royalty payment. However, if the incumbent has much lower marginal cost than the entrant, the incumbent has an incentive not to license the technology. Second, a new set of issues arises when multiple potential licensors are considered. The maximum and minimum values of the royalty payment decrease as the number of incumbents with the technology increases. Moreover, each incumbent has an incentive to sell the technology before other incumbents do, which leads to a Prisoner`s Dilemma situation. Third, in the case of multiple licensees, a potential entrant`s willingness to pay for a license depends upon the strategies of other firms. The optimal pricing strategy of the licensor is identified.

• Ji Hong Kim