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Today, the editor brings you "A Closer Look (31): Intensive Reading of Doctoral Dissertations."
Research on Patent Operation and Supply Management Strategy of Technology Supply Chain in Competitive Environment
of Chapter IV(1)".
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Dear, this is LearningYard Academy!
Today, the editor brings you
"Yue Lan (31)：the chapter 4（1） of the doctoral dissertation
'Research on Patent Operation and Supply Management Strategies of Technology Supply Chain in a Competitive Environment'".
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一、内容摘要（Summary of content）
In this issue, we will introduce Chapter 3 of the doctoral dissertation "Research on Patent Operation and Supply Management Strategy of Technology Supply Chain in Competitive Environment" from three aspects: Supplier Development Strategy Based on Vertical and Cross-licensing in Supplier Competitive Environment (1): Model Description, Construction and Solution.
This tweet will introduce the third chapter of the doctoral dissertation "Research on Patent Operation and Supply Management Strategies of Technology Supply Chain in a Competitive Environment" from three aspects: mind mapping, intensive reading content, and knowledge supplementation: Vertical and cross-license based supplier development strategies in a supplier competitive environment (1): Model description, construction and solution.
二、思维导图（Mind mapping）
三、精读内容（Intensive reading content）
(1) Research content
This chapter examines some of the substitution strategies that manufacturers employ when existing suppliers are unable to meet their cost and quality requirements, including relying on existing suppliers to ensure product quality and technical proficiency, and cultivating alternative suppliers and upgrading their technical capabilities through supplier development. Several core questions were raised, including whether manufacturers should develop suppliers under certain conditions, how competition and cross-licensing affect innovation and the performance of supply chain members, and how cross-licensing of technology suppliers affects manufacturers and other supply chain participants.
This chapter explores some of the substitution strategies manufacturers adopt when existing suppliers cannot meet their cost and quality requirements, including relying on existing suppliers to ensure product quality and technical level, and cultivating alternative suppliers and enhancing their technical capabilities through supplier development. It also raises several core questions, including whether manufacturers should develop suppliers under certain conditions, how competition and cross-licensing affect innovation and supply chain member performance, and how cross-licensing by technology suppliers affects manufacturers and other supply chain participants.
（二）模型描述（Model description）
This section describes a three-tier supply chain model consisting of technology suppliers, contract manufacturers, and equipment manufacturers, and explores the different management strategies of equipment manufacturers for technology suppliers. Three supply management strategies of equipment manufacturers are examined: single-supplier strategy, supplier development strategy based on vertical licensing, and supplier development strategy with cross-licensing.
This section describes a three-tier supply chain model consisting of technology suppliers, contract manufacturers, and equipment manufacturers, and explores the different management strategies of equipment manufacturers for technology suppliers. Three supply management strategies of equipment manufacturers are examined: single supplier strategy, vertical licensing-based supplier development strategy, and cross-licensing supplier development strategy.
A single-vendor strategy is one in which the device manufacturer obtains a longitudinal design license from only one original supplier and does not involve the development of alternative suppliers.
The single-vendor strategy refers to the equipment manufacturer obtaining vertical design licenses from only one original supplier, and does not involve the development of alternative suppliers.
A vertical licensing-based vendor development strategy is one in which a device manufacturer selects to develop a replacement supplier, but obtains a vertical design license from the original supplier and the substitute supplier independently, without cross-licensing between these vendors.
A vertical licensing-based vendor development strategy means that device manufacturers choose to develop alternative suppliers, but independently obtain vertical design licenses from original suppliers and alternative suppliers, without cross-licensing between these suppliers.
A cross-licensing vendor development strategy is one in which the device manufacturer similarly chooses to develop an alternative supplier and obtains a vertical design license from the original supplier and the substitute supplier, respectively, but there is a cross-licensing agreement between the two vendors.
A vendor development strategy with cross-licensing means that the device manufacturer also chooses to develop alternative suppliers and obtains vertical design licenses from the original supplier and the alternative supplier respectively, but there is a cross-licensing agreement between the two suppliers.
（三）模型的构建与求解（Model construction and solution）
When considering the different strategies adopted by device manufacturers, the different inverse demand functions of the market are illustrated in the figure below.
When considering the different strategies adopted by equipment manufacturers, the different inverse demand functions of the market are depicted in the figure below.
1.单一供应商策略模式（Single vendor strategy model）
When a technology supplier chooses a single-supplier strategy model, the quantity decision of the equipment manufacturer, the price decision of the OEM manufacturer, the negotiation between the equipment manufacturer and the original supplier, and the technological innovation level decision of the original supplier are obtained by solving the first derivative of the profit function of each participant.
When the technology supplier chooses the single supplier strategy model, the quantity decision of the equipment manufacturer, the price decision of the foundry manufacturer, the negotiation between the equipment manufacturer and the original supplier, and the technical innovation level decision of the original supplier are obtained by solving the first derivative of the profit function of each participant.
In the end, the equilibrium profit of the original supplier, the OEM and the equipment manufacturer is obtained.
In the end, we get a balanced profit for the original supplier, the OEM and the equipment manufacturer.
2.基于纵向许可的供应商开发策略模式（Vertical License-Based Supplier Development Strategy Model）
When equipment manufacturers select supplier development strategies, they can obtain the equilibrium level of technological innovation, royalty license fee, fixed license fee, innovation investment support ratio coefficient, module price, product retail price and sales volume of each participant through mathematical derivation.
The mathematical derivation of the equilibrium level of technological innovation, commission licensing fees, fixed licensing fees, innovation investment support ratio coefficients, component prices, product retail prices, and sales volumes of each participant are obtained by the equipment manufacturer when choosing a supplier development strategy.
Finally, the equilibrium profit expressions for the original supplier, the substitute supplier, the OEM manufacturer and the equipment manufacturer are given.
Finally, the equilibrium profit expressions of original supplier, substitute supplier, foundry and equipment manufacturer are given.
3.存在交叉许可的供应商开发策略模式（Vendor development strategy model with cross-licensing）
When the device manufacturer chooses the vendor development strategy, and the original supplier and the substitute supplier are cross-licensed, the model takes into account factors such as the level of technological innovation, licensing fees, component prices, and product retail prices, as well as the profit maximization goals of each player. Through these decision-making processes, the optimal strategies and corresponding economic performance of each member of the supply chain are derived. Finally, the equilibrium profit expressions of the original supplier, the substitute supplier, the OEM manufacturer and the equipment manufacturer are given.
When the equipment manufacturer selects the supplier development strategy, and the original supplier and the alternative supplier cross-license, the model takes into account factors such as the level of technological innovation, licensing fees, component prices and product retail prices, as well as the profit maximization goals of each participant. Through these decision-making processes, the optimal strategies and corresponding economic performance of each member of the supply chain are obtained. Finally, the equilibrium profit expressions of the original supplier, the alternative supplier, the foundry and the equipment manufacturer are given.
（四）研究结论（Research conclusion）
Equipment manufacturers choose to develop alternative suppliers based on their weak bargaining power relative to the original suppliers, and at the same time the substitute suppliers have strong innovation capabilities, which are relatively weak.
Equipment manufacturers choose to develop alternative suppliers on the condition that their bargaining power is relatively weak compared to the original supplier, and the alternative supplier has strong innovation ability, while the original supplier's innovation ability is relatively weak.
When device manufacturers choose to develop alternative suppliers, the impact of cross-licensing between suppliers on innovation is complex. On the one hand, cross-licensing may lead to a weakening of the original supplier's incentive to innovate because of the free-rider effect. On the other hand, if there is a significant difference in the technological innovation capabilities of the two suppliers, cross-licensing will encourage the substitute supplier to invest more in innovation.
When equipment manufacturers choose to develop alternative suppliers, the impact of cross-licensing between suppliers on innovation is more complex. On the one hand, cross-licensing may lead to a weakening of the original supplier's innovation incentives because of the free-rider effect. On the other hand, if the technological innovation capabilities of the two suppliers are significantly different, cross-licensing will instead prompt the alternative supplier to increase investment in innovation.
四、知识补充——逆向归纳法（Knowledge Supplement—reverse induction）
The inverse induction method is a method to solve the dynamic game equilibrium. The so-called dynamic game means that there is a sequence of actions of the participants in the game, and the participants of the later action can observe the previous actions. Reverse induction is logically rigorous, but it has a "dilemma". The so-called inverse induction method pushes back from the last step of the dynamic game to solve the equilibrium result of the dynamic game. The reverse induction method is also known as the reverse induction method. It is completely inductive reasoning, where the reasoning is deductive, i.e., the conclusion is inevitable.
Reverse induction is a method to solve the equilibrium of dynamic games. The so-called dynamic game refers to the fact that there is a sequence of actions of the players in the game, and the participants who act later can observe the previous actions. Reverse induction is logically strict, but it has "dilemmas". The so-called reverse induction is to push back from the last step of the dynamic game to solve the equilibrium result of the dynamic game. Reverse induction is also known as inverse method. It is completely inductive reasoning, and its reasoning is deductive, that is, the conclusion is necessary.
In a complete and perfect dynamic game, the rational gambler who acts first will inevitably consider how the later player will choose the strategy in the later stage when choosing a strategy in the earlier stage. Therefore, only in the last stage of the game, when there is no longer a follow-up stage, can the gambler make a wise choice. After the strategy chosen by the gamer in the later stage is determined, it is relatively easy for the gamer in the previous stage to choose the strategy.
In a complete and perfect dynamic game, the rational player who acts first will necessarily consider how the later player will choose the strategy in the later stage when choosing the strategy in the previous stage. Therefore, only in the last stage of the game can the player make an informed choice if there is no longer any restriction in the subsequent stages. After the strategy chosen by the player in the later stage is determined, the player in the previous stage can choose the strategy relatively easily.
The reverse induction method starts from the analysis of the last stage of the dynamic game, and gradually summarizes the selection strategies of the gamers at each stage.
Reverse induction is to analyze from the last stage of the dynamic game and gradually summarize the selection strategies of the players in each stage.
The logical basis of the inverse induction method: the participants who act first in the dynamic game will inevitably consider the behavior choices of the participants who act later in the later stage when choosing their behaviors in the previous stage, and only the participants in the last stage can make choices directly without the constraints of other participants. When the choice of the participants in the later stage is determined, the behavior of the participants in the previous stage is easy to determine. Reverse induction excludes untrustworthy threats or promises.
The logical basis of reverse induction: In a dynamic game, the participants who act first in the previous stage will necessarily consider the behavior choices of the participants who act later in the later stage when choosing their behavior. Only the participants in the last stage can directly make choices without the constraints of other participants. And when the choices of the participants in the later stage are determined, the behavior of the participants in the previous stage is easy to determine. Reverse induction excludes uncredible threats or promises.
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please leave us a message,
and let us meet tomorrow.
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Translation: ChatGPT
参考资料：百度百科、Chat GPT
Reference: He Haojia. Research on patent operation and supply management strategy of technology supply chain in competitive environment [D]. University of Electronic Science and Technology of China, 2023.
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