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Patent Pools, Vertical Integration, and Downstream Competition

Author

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  • Markus Reisinger
  • Emanuele Tarantino

Abstract

Patent pools are commonly used to license technologies to manufacturers. Whereas previous studies focused on manufacturers active in independent markets, we analyze pools licensing to competing manufacturers, allowing for multiple licensors and non-linear tariffs. We find that the impact of pools on welfare depends on the industry structure: Whereas they are procompetitive when no manufacturer is integrated with a licensor, the presence of vertically integrated manufacturers triggers a novel trade-off between horizontal and vertical price coordination. Specifically, pools are anticompetitive if the share of integrated firms is large, procompetitive otherwise. We then formulate information-free policies to screen anticompetitive pools.

Suggested Citation

  • Markus Reisinger & Emanuele Tarantino, 2018. "Patent Pools, Vertical Integration, and Downstream Competition," CRC TR 224 Discussion Paper Series crctr224_2018_057, University of Bonn and University of Mannheim, Germany.
    • Handle: RePEc:bon:boncrc:crctr224_2018_057
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    File URL: https://www.crctr224.de/research/discussion-papers/archive/dp057
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    Cited by:

    1. Joachim Heinzel & Simon Hoof, 2020. "Oligopolistic Upstream Competition with Differentiated Inputs," Working Papers CIE 129, Paderborn University, CIE Center for International Economics.
    2. Derek J. Clark & Jean-Christophe Pereau, 2021. "Group bargaining in supply chains," Review of Economic Design, Springer;Society for Economic Design, vol. 25(3), pages 111-138, September.
    3. Nie, Pu-yan & Chen, Zi-rui & Wang, Chan, 2021. "Intellectual property pricing under asymmetric duopoly," Journal of Retailing and Consumer Services, Elsevier, vol. 58(C).
    4. Tesoriere, Antonio, 2019. "Stable sharing rules and participation in pools of essential patents," Games and Economic Behavior, Elsevier, vol. 117(C), pages 40-58.
    5. Xiaodong Yuan & Xiaotao Li, 2022. "Pledging Patent Rights for Fighting Against the COVID-19: From the Ethical and Efficiency Perspective," Journal of Business Ethics, Springer, vol. 179(3), pages 683-696, September.
    6. Wang, Lucy Xiaolu, 2022. "Global drug diffusion and innovation with the medicines patent pool," Journal of Health Economics, Elsevier, vol. 85(C).
    7. Schankerman, Mark & Galasso, Alberto, 2020. "Licensing Life-Saving Drugs for Developing Countries: Evidence from the Medicines Patent Pool," CEPR Discussion Papers 15544, C.E.P.R. Discussion Papers.

    More about this item

    Keywords

    patent pools and horizontal pricing agreements; complementary patents; vertical integration and restraints; antitrust policy;
    All these keywords.

    JEL classification:

    • K11 - Law and Economics - - Basic Areas of Law - - - Property Law
    • 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
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital

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