Brand name collaboration and optimal tariff Sugata Marjit a , Hamid Beladi b, ⁎ , Tarun Kabiraj c a Center for Studies in Social Sciences, India b Department of Economics, College of Business, University of Texas at San Antonio, San Antonio TX 78249, USA c Indian Statistical Institute, India Accepted 22 December 2006 Abstract In a Cournot–Nash framework we study the possibility of cross-border brand name collaborations between two firms where superior brand enhances consumers' valuation for the product. We show that a firm owning a superior brand will license its name to a less reputed organization provided the licensee has already established its name to some extent. In other words, “collaborations” tend to take place between the “equals”. We extend our analysis to show how a tariff on the reputed brand product affects the conditions for collaboration. We also determine the optimal tariff rate consistent with the host country's welfare maximization. © 2007 Elsevier B.V. All rights reserved. Keywords: Brand name; Optimal tariff 1. Introduction Recent years have witnessed a large number of collaborative deals between foreign firms from the developed countries and host firms of the developing countries. Under such a deal, a foreign firm not only transfers its superior production knowledge and complementary inputs, but often allows the local firm to use its brand name in marketing the products. Technology licensing generally reduces production costs, 1 but using of a more reputed brand has a positive marketing effect. Functionally, it is difficult to isolate these two effects, but analytically the pure brand name effect should be discussed Economic Modelling 24 (2007) 636 – 647 www.elsevier.com/locate/econbase ⁎ Corresponding author. Tel.: +1 210 458 7038; fax: +1 210 458 7040. E-mail address: hamid.beladi@utsa.edu (H. Beladi). 1 There is a large literature that discusses different aspects of technology transfer. A small subset of this literature includes Chatterjee and Ulvila (1982), Gallini (1984), Shepard (1987), Rockett (1990), Tang and Yu (1990), Wang (1998), Mukherjee (2001), Glass and Saggi (2002), and Kabiraj and Marjit (1992, 2003). 0264-9993/$ - see front matter © 2007 Elsevier B.V. All rights reserved. doi:10.1016/j.econmod.2006.12.004