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Abstract
In the United States, public universities may choose to license a plant variety to a limited number
of producers (an exclusive license) or to an unlimited number of producers (an open license). This
choice has implications for the quantity and distribution of total benefits from the variety. Universities
have traditionally released new apple varieties under open licenses, but several universities
have now begun exploring or implementing exclusive licensing. In this paper, we consider the choice
faced by a public university when licensing a plant variety patent, with a focus on apples. Our work
differs from the majority of past studies on patent licensing because we allow licensees to determine
the signal of product quality through a trademark and we consider welfare objectives for a public
university that differ from simple maximization of patent income. In this context, we compare
monopoly licensing and two oligopoly licensing scenarios. We then solve for the optimal choice
of licensing fees for the university. Using numerical simulations, we find that consumer surplus
and social welfare may be higher under exclusive licensing if consumers are relatively responsive to
expenditure on the trademark but relatively insensitive to price. However, exclusive licenses may
create distributional concerns among producers. Furthermore, different objective functions of the
university can imply different optimal outcomes for both the number of licensees and the licensing
fees. Although we focus on apples, this model and its results could apply in a variety of settings.