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Patents, industry control, and the rise of the giant American corporation

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  • Scott, Peter
  • Spadavecchia, Anna

Abstract

We examine how some early corporations used patents to control competition, thus creating monopoly or cartel positions, with super-normal profits. We thus highlight one economic rationale for the rise of the giant corporation, expanding the Chandlerian paradigm. Based on evidence from the House of Representatives', 1912 “Oldfield hearings” and three industry case studies, we demonstrate how patent pools and restrictive licensing of fundamental patents led to the stifling of innovation and to negative competition and welfare effects. Focusing on pooling and licensing agreements is particularly important, as these, unlike patents themselves, are not normally open to public scrutiny.

Suggested Citation

  • Scott, Peter & Spadavecchia, Anna, 2023. "Patents, industry control, and the rise of the giant American corporation," Research Policy, Elsevier, vol. 52(1).
    • Handle: RePEc:eee:respol:v:52:y:2023:i:1:s004873332200172x
    DOI: 10.1016/j.respol.2022.104651
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    References listed on IDEAS

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    More about this item

    Keywords

    Intellectual property rights; Patent pools; Restrictive licensing; Industry control; USA corporations; Business history;
    All these keywords.

    JEL classification:

    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
    • L42 - Industrial Organization - - Antitrust Issues and Policies - - - Vertical Restraints; Resale Price Maintenance; Quantity Discounts
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection

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