creator Liang, Shao-huai advisor Sabbaghi, Navid This thesis attempts to analyze the incentive compatible (IC) region for the royalty contract in an innovation context. It also describes the contracts that induce the licensee and the patentee to obtain the maximum pro t when using this licensing contract. We analyze the IC region for cost-reducing innovations " and royalty ratios in two situations: the non-drastic innovation and the drastic innovation. We also nd when licensing occurs, there is an e ciency loss. However, the IC region can limit the e ciency loss. Then, we extend our results to a two-stage game in order to check whether the royalty contract is still a good contract for both the licensee and the patentee from a pro t perspective. In stage two, when the size of innovation is smaller than the size of innovation in stage one, royalty contracts are inferior to other contracts. However, when the size of innovation in stage two is greater than that in stage one, the royalty contract is an improvement over other contracts. Submitted by Liana Khananashvili (khananashvili@iit.edu) on 2014-11-11T18:31:49Z No. of bitstreams: 2 Efficiency of Patent Contracts.pdf: 2959685 bytes, checksum: 5988841860fa45569fd34eb03bda31b9 (MD5) signed title page.pdf: 72152 bytes, checksum: dc7db6b406f98ea76f514cb1823e4588 (MD5) Made available in DSpace on 2014-11-11T18:31:49Z (GMT). No. of bitstreams: 2 Efficiency of Patent Contracts.pdf: 2959685 bytes, checksum: 5988841860fa45569fd34eb03bda31b9 (MD5) signed title page.pdf: 72152 bytes, checksum: dc7db6b406f98ea76f514cb1823e4588 (MD5) Previous issue date: 2014-05 PH.D in Management Science, May 2014 2014 2014-05 http://hdl.handle.net/10560/3338 en Dissertation born digital application/pdf In Copyright http://rightsstatements.org/page/InC/1.0/ Restricted Access Other Illinois Institute of Technology Affiliated department