RoyaltyStat Blog

Alan Kwan & Gaurav Kankanhalli

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Surplus Bargaining and the Effect of Contract Redaction on Royalties

Posted by Alan Kwan & Gaurav Kankanhalli on Dec 9, 2017 10:43:30 AM

We find little empirical work in academia about the determinants of royalty rates covering intellectual property (IP) licensing transactions. Beyond the exchange of intellectual property itself, licensing transactions play an important role to market practitioners. Market practitioners benchmark their own pricing terms based on prior royalty rates transactions. Royalty rates are also important for those analyzing IP for transfer pricing and patent litigation, where comparable transactions are recognized by tax authorities and courts as benchmarks of value.