Transfers of technology to least developed countries (LDCs) are
often hindered by lack of absorptive capacity on the receiving party,
the possibility of imitation, and relatively thin markets for the licensed
product. We propose a licensing model that considers these problems.
A licensor must decide on the amount of know-how to costly transfer
to the licensee, taking into account that this transfer may prompt the
introduction of an imitation product. We study how this a¤ects know-
how transfers and the form of scheduled payments that support these
transfers.