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Intellectual property clearinghouses: The effects of reduced transaction costs in licensing

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  • Aoki, Reiko
  • Schiff, Aaron

Abstract

We focus on downstream uses of intellectual property (IP) that combine multiple rights and examine the effects of introducing an IP clearinghouse. We identify the two sometimes conflicting functions of clearinghouses: transaction cost reductions and coordination. We show that reduced transaction costs cause licensors to raise royalties in some cases, which makes them worse off due to the [`]tragedy of the anticommons'. Downstream welfare effects may also be positive or negative and we characterize the effects on downstream manufacturers and final consumers. We also show that total welfare is most likely to increase following a transaction cost reduction when the number of intellectual property rights per downstream use is small, or if rights are relatively substitutable in downstream use, but it is also possible for welfare to decrease.

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Bibliographic Info

Article provided by Elsevier in its journal Information Economics and Policy.

Volume (Year): 22 (2010)
Issue (Month): 3 (July)
Pages: 218-227

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Handle: RePEc:eee:iepoli:v:22:y:2010:i:3:p:218-227

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Web page: http://www.elsevier.com/locate/inca/505549

Related research

Keywords: Intellectual property Licensing Tragedy of the anticommons Clearinghouses;

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References

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  1. Shapiro, Carl, 2000. "Navigating the Patent Thicket: Cross Licenses, Patent Pools, and Standard-Setting," Competition Policy Center, Working Paper Series qt4hs5s9wk, Competition Policy Center, Institute for Business and Economic Research, UC Berkeley.
  2. Lerner, Josh & Tirole, Jean, 2003. "Efficient Patent Pools," IDEI Working Papers 211, Institut d'Économie Industrielle (IDEI), Toulouse.
  3. Arora, Ashish & Fosfuri, Andrea, 1999. "Licensing the Market for Technology," CEPR Discussion Papers 2284, C.E.P.R. Discussion Papers.
  4. Athreye, Suma & Cantwell, John, 2007. "Creating competition?: Globalisation and the emergence of new technology producers," Research Policy, Elsevier, vol. 36(2), pages 209-226, March.
  5. Nancy T. Gallini & Brian D. Wright, 1990. "Technology Transfer under Asymmetric Information," RAND Journal of Economics, The RAND Corporation, vol. 21(1), pages 147-160, Spring.
  6. Buchanan, James M & Yoon, Yong J, 2000. "Symmetric Tragedies: Commons and Anticommons," Journal of Law and Economics, University of Chicago Press, vol. 43(1), pages 1-13, April.
  7. Hollander, Abraham, 1984. "Market structure and performance in intellectual property : The case of copyright collectives," International Journal of Industrial Organization, Elsevier, vol. 2(3), pages 199-216, September.
  8. Kleit, Andrew N, 2000. "ASCAP Versus BMI (Versus CBS): Modeling Competition between and Bundling by Performance Rights Organizations," Economic Inquiry, Western Economic Association International, vol. 38(4), pages 579-90, October.
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Cited by:
  1. Ghafele, Roya & Gibert, Benjamin, 2011. "The Transaction Cost Benefits of Electronic Patent Licensing Platforms: A Discussion at the Example of the PatentBooks Model," MPRA Paper 36010, University Library of Munich, Germany, revised 10 Jan 2012.

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