１　Faculty of Economics, Gakushuin University, Tokyo, Japan.

２　To avoid repeating “more” and “less,” we will simply refer to firm 1 as “efficient” and firm 2 as “inefficient.”

３　We limit attention to zero-royalty fixed-fee licenses since such licenses have been shown to maximize outside inventor revenue under basic assumptions.  (Kamien, 1992)

４　The same problem plagues most strategic licensing models that predict transfer of ex ante incumbent profits to the outside inventor via licensing auctions.