INTERNATIONAL TECHNOLOGY-TRANSFER WITH AN INFORMATION ASYMMETRY AND ENDOGENOUS RESEARCH-AND-DEVELOPMENT

In this paper, an information asymmetry concerning technology type and the cost of operating across national boundaries interact with location considerations to determine whether international technology transfer occurs via the export of goods, subsidiaries, or licensing. It is shown that market share restrictions and per-unit royalties can signal technology type and make licensing the most attractive option. In addition, it is shown that policies which restrict the mode of technology transfer do not necessarily reduce the amount of research and development undertaken.