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Intellectual Property, Antitrust, and Strategic Behavior

In: Innovation Policy and the Economy, Volume 3

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  • Dennis W. Carlton
  • Robert H. Gertner

Abstract

Economic growth depends in large part on technological change. Laws governing intellectual property rights protect inventors from competition in order to create incentives for them to innovate. Antitrust laws constrain how a monopolist can act in order to maintain its monopoly in an attempt to foster competition. There is a fundamental tension between these two different types of laws. Attempts to adapt static antitrust analysis to a setting of dynamic R&D competition through the use of 'innovation markets' are likely to lead to error. Applying standard antitrust doctrines such as tying and exclusivity to R&D settings is likely to be complicated. Only detailed study of the industry of concern has the possibility of uncovering reliable relationships between innovation and industry behavior. One important form of competition, especially in certain network industries, is between open and closed systems. We have presented an example to illustrate how there is a tendency for systems to close even though an open system is socially more desirable. Rather than trying to use the antitrust laws to attack the maintenance of closed systems, an alternative approach would be to use intellectual property laws and regulations to promote open systems and the standard setting organizations that they require. Recognition that optimal policy toward R&D requires coordination between the antitrust and intellectual property laws is needed.

(This abstract was borrowed from another version of this item.)

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This chapter was published in:

  • Adam B. Jaffe & Josh Lerner & Scott Stern, 2003. "Innovation Policy and the Economy, Volume 3," NBER Books, National Bureau of Economic Research, Inc, number jaff03-1.
    This item is provided by National Bureau of Economic Research, Inc in its series NBER Chapters with number 10792.

    Handle: RePEc:nbr:nberch:10792

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    References

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    1. B. Douglas Bernheim & Michael D. Whinston, . "Exclusive Dealing," Working Papers 96008, Stanford University, Department of Economics.
    2. Bronwyn H. Hall, 1987. "The Effect of Takeover Activity on Corporate Research and Development," NBER Working Papers 2191, National Bureau of Economic Research, Inc.
    3. Dennis W. Carlton & Michael Waldman, 1998. "The Strategic Use of Tying to Preserve and Create Market Power in Evolving Industries," NBER Working Papers 6831, National Bureau of Economic Research, Inc.
    4. Joseph Farrell and Garth Saloner., 1989. "Converters, Compatibility, and the Control of Interfaces," Economics Working Papers 89-130, University of California at Berkeley.
    5. Charles I. Jones & John C. Williams, 1998. "Measuring The Social Return To R&D," The Quarterly Journal of Economics, MIT Press, vol. 113(4), pages 1119-1135, November.
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    7. David S. Evans & Richard Schmalensee, 2002. "Some Economic Aspects of Antitrust Analysis in Dynamically Competitive Industries," NBER Chapters, in: Innovation Policy and the Economy, Volume 2, pages 1-50 National Bureau of Economic Research, Inc.
    8. Spence, Michael, 1984. "Cost Reduction, Competition, and Industry Performance," Econometrica, Econometric Society, vol. 52(1), pages 101-21, January.
    9. Dennis W. Carlton & Steven C. Salop, 1995. "You Keep On Knocking But You Can't Come In: Evaluating Restrictions On Access To Input Joint Ventures," University of Chicago - George G. Stigler Center for Study of Economy and State 111, Chicago - Center for Study of Economy and State.
    10. Joseph Farrell & Garth Saloner, 1984. "Standardization, Compatibility and Innovation," Working papers 345, Massachusetts Institute of Technology (MIT), Department of Economics.
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    13. Stanley M. Besen & Joseph Farrell, 1994. "Choosing How to Compete: Strategies and Tactics in Standardization," Journal of Economic Perspectives, American Economic Association, vol. 8(2), pages 117-131, Spring.
    14. Tether, B. S., 1998. "Small and large firms: sources of unequal innovations?," Research Policy, Elsevier, vol. 27(7), pages 725-745, November.
    15. Kenneth Arrow, 1962. "Economic Welfare and the Allocation of Resources for Invention," NBER Chapters, in: The Rate and Direction of Inventive Activity: Economic and Social Factors, pages 609-626 National Bureau of Economic Research, Inc.
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    17. Cohen, Wesley M. & Levin, Richard C., 1989. "Empirical studies of innovation and market structure," Handbook of Industrial Organization, in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 2, chapter 18, pages 1059-1107 Elsevier.
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    19. Barry Nalebuff, 2000. "Competing Against Bundles," Yale School of Management Working Papers ysm157, Yale School of Management.
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    Citations

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    Cited by:
    1. Dennis W. Carlton, 2007. "Does Antitrust Need to be Modernized?," EAG Discussions Papers 200703, Department of Justice, Antitrust Division.
    2. Giovanni B. Ramello, 2002. "Copyright and Antitrust Issues," LIUC Papers in Economics 114, Cattaneo University (LIUC).
    3. Peter Møllgaard & Jo Lorentzen, 2005. "Competition Policy and Innovation," CIE Discussion Papers 2005-12, University of Copenhagen. Department of Economics. Centre for Industrial Economics.
    4. Christine Greenhalgh & Padraig Dixon, 2002. "The Economics of Intellectual Property: A Review to Identify Themes for Future Research," Economics Series Working Papers 135, University of Oxford, Department of Economics.
    5. Dennis W. Carlton & Ken Heyer, 2008. "Appropriate Antitrust Policy Towards Single-Firm Conduct," EAG Discussions Papers 200802, Department of Justice, Antitrust Division.
    6. Leonardo Burlamaqui, 2006. "How Should Competition Policies and Intellectual Property Issues Interact in a Globalised World? A Schumpeterian Perspective," The Other Canon Foundation and Tallinn University of Technology Working Papers in Technology Governance and Economic Dynamics 06, TUT Ragnar Nurkse School of Innovation and Governance.
    7. Seifert, Jacob, 2013. "Compulsory Licensing, Innovation and Welfare," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79778, Verein für Socialpolitik / German Economic Association.
    8. Klaus Kultti & Tuomas Takalo & Juuso Toikka, 2005. "Patents Hinder Collusion," Industrial Organization 0503015, EconWPA.
    9. Shastitko, A. & Kurdin, A., 2014. "Protection of Intellectual Property Rights and Competition Policy: Seeking for a Better Balance," Journal of the New Economic Association, New Economic Association, vol. 21(1), pages 111-135.

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