Abstract: For the innovative manufacturer, technology licensing is a practical approach to generate profits by the improved (or new) technology obtained from innovation. For the manufacturer with no (or weak) R&D abilities to engage in innovation, technology licensing is an effective way to acquire the new technology. In a two-echelon supply chain consisting of an R&D manufacturer, a non-R&D manufacturer and a retailer, the R&D manufacturer can license technology to the non-R&D manufacturer and charge technology authorization fees from the non-R&D manufacturer. Considering the uncertainty of R&D results, the optimal technology authorization strategy choice (including technology authorization based on royalty fee, fixed fee, mixed fee, and so on) of the R&D manufacturer is studied. Then, the effect of product substitution and technology spillover on the optimal charging fee are discussed. Finally, the optimal R&D levels of the R&D manufacturer, the whole price of non-R&D manufacturer, the profit of non-R&D manufacturer, the profit of retailer with and without the technology authorization are compared respectively. It is shown that: (1) the optimal technology authorization strategy choice of the R&D manufacturer is not affected by the product substitution, when the degree of technology spillover is small (large), the optimal choice of the R&D manufacturer is the authorization strategy based on mixed fees (royalty fee). (2) Both the charging fee in the royalty fee strategy and the fixed fee in the mixed fee strategy are affected by the product substitution and the technology spillover, while the royalty fee in the mixed fee strategy is only affected by the product substitution. (3) When the degrees of both the product substitution and the technology spillover are within a certain range, the profit of retailer can be improved by the technology authorization of the R&D manufacturer. (4) The R&D investment level of the R&D manufacturer with the technology authorization is always greater than that without the technology authorization.

Key words: supply chain; technology licensing; royalty fee; fixed fee; mixed fee