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The Shapley Value as a Guide to FRAND Licensing Agreements

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  • Dehez Pierre

    (CORE, University of Louvain, 34 Voie du Roman Pays L1.03.01, Louvain-la-Neuve 1348, Belgium; BETA, University of Lorraine, Nancy, France)

  • Poukens Sophie

    (CORE, University of Louvain, Louvain-la-Neuve, Belgium)

Abstract

We consider the problem faced by standard-setting organizations of specifying Fair, Reasonable and Non-Discriminatory (FRAND) agreements. Along with Layne-Farrar et al. (2007. “Pricing Patents for Licensing in Standard-Setting Organizations: Making Sense of FRAND Commitments.” 74 Antitrust Law Journal 671–706), we model the problem as a cooperative game with transferable utility, allowing for patents that have substitutes. Assuming that a value has been assigned to these “weak” patents, we obtain a formula for the Shapley value that gives an insight into what FRAND agreements could look like.

Suggested Citation

  • Dehez Pierre & Poukens Sophie, 2014. "The Shapley Value as a Guide to FRAND Licensing Agreements," Review of Law & Economics, De Gruyter, vol. 10(3), pages 1-20, November.
    • Handle: RePEc:bpj:rlecon:v:10:y:2014:i:3:p:20:n:1
    DOI: 10.1515/rle-2013-0016
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    1. Dehez, Pierre, 2021. "1-convex transferable utility games, a reappraisal," LIDAM Discussion Papers CORE 2021016, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    2. Dehez Pierre & Poukens Sophie, 2014. "The Shapley Value as a Guide to FRAND Licensing Agreements," Review of Law & Economics, De Gruyter, vol. 10(3), pages 1-20, November.
    3. Wipusanawan, Chayanin, 2023. "Standard-essential patents, innovation, and competition," Other publications TiSEM 292e319a-9e6a-4465-8f8f-7, Tilburg University, School of Economics and Management.
    4. Jens Leth Hougaard & Chiu Yu Ko & Xuyao Zhang, 2017. "A Welfare Economic Interpretation of FRAND," IFRO Working Paper 2017/04, University of Copenhagen, Department of Food and Resource Economics.
    5. Hougaard, Jens Leth & Ko, Chiu Yu & Zhang, Xuyao, 2023. "A conceptual model for FRAND royalty setting," Mathematical Social Sciences, Elsevier, vol. 123(C), pages 167-176.

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