Jostling for Advantage: Licensing and Entry into Patent Portfolio Races
AbstractLicensing in a patent thicket allows firms to either avoid or resolve hold-up. Firms’ R&D incentives depend on whether they license ex ante or ex post. We develop a model of a patent portfolio race, which allows for endogenous R&D efforts, to study firms’ choice between ex ante and ex post licensing. The model shows that firms’ relationships in product markets and technology space jointly determine the type of licensing contract chosen. In particular, product market competitors are more likely to avoid patent portfolio races, since the threat of hold-up increases. On the other hand, more valuable technologies are more likely to give rise to patent portfolio races. We also discuss the welfare implications of these results.
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Bibliographic InfoPaper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 5753.
Date of creation: Jul 2006
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Other versions of this item:
- Siebert, Ralph & Graevenitz, Georg von, 2006. "Jostling for Advantage: Licensing and Entry into Patent Portfolio Races," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 184, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
- L49 - Industrial Organization - - Antitrust Issues and Policies - - - Other
- L63 - Industrial Organization - - Industry Studies: Manufacturing - - - Microelectronics; Computers; Communications Equipment
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-10-28 (All new papers)
- NEP-INO-2006-10-28 (Innovation)
- NEP-MIC-2006-10-28 (Microeconomics)
- NEP-TID-2006-10-28 (Technology & Industrial Dynamics)
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