Jostling for Advantage: Licensing and Entry into Patent Portfolio Races

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Jostling for Advantage: Licensing and Entry into Patent Portfolio Races

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Siebert, Ralph
von Graevenitz, Georg

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Abstract

Licensing 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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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 5753.

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Date of creation: Jul 2006
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Handle: RePEc:cpr:ceprdp:5753

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Paper
- Ralph Siebert & Georg von Graevenitz, 2006. "Jostling for Advantage: Licensing and Entry into Patent Portfolio Races," Discussion Papers 184, SFB/TR 15 Governance and the Efficiency of Economic Systems, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich. [Downloadable!]

Find related papers by JEL classification:
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)

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

Johannes Hörner, 2004. "A Perpetual Race to Stay Ahead," Review of Economic Studies, Blackwell Publishing, vol. 71(4), pages 1064-1088, October. [Downloadable!] (restricted)
Carl Shapiro, 2001. "Navigating the Patent Thicket: Cross Licenses, Patent Pools, and Standard Setting," NBER Chapters, in: Innovation Policy and the Economy, Volume 1, pages 119-150 National Bureau of Economic Research, Inc. [Downloadable!]
Other versions:
- Carl Shapiro, 2003. "Navigating the Patent Thicket: Cross Licenses, Patent Pools, and Standard-Setting," Law and Economics 0303005, EconWPA. [Downloadable!]
- Carl Shapiro, 2004. "Navigating the Patent Thicket: Cross Licenses, Patent Pools and Standard Setting," Levine's Working Paper Archive 122247000000000539, David K. Levine. [Downloadable!]
- Carl Shapiro, 2000. "Navigating the Patent Thicket: Cross Licenses, Patent Pools, and Standard-Setting," Competition Policy Center, Working Paper Series CPC00-011, Competition Policy Center, Institute for Business and Economic Research, UC Berkeley. [Downloadable!]
Nti, Kofi O, 1997. "Comparative Statics of Contests and Rent-Seeking Games," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 38(1), pages 43-59, February.
Anand, Bharat N & Khanna, Tarun, 2000. "The Structure of Licensing Contracts," Journal of Industrial Economics, Blackwell Publishing, vol. 48(1), pages 103-35, March. [Downloadable!] (restricted)
Bronwyn Hall, 2004. "Exploring the patent explosion," ESRC Centre for Business Research - Working Papers wp291, ESRC Centre for Business Research. [Downloadable!]
Other versions:
- Bronwyn H. Hall, 2004. "Exploring the Patent Explosion," NBER Working Papers 10605, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
- Bronwyn H. Hall, 2005. "Exploring the Patent Explosion," The Journal of Technology Transfer, Springer, vol. 30(2_2), pages 35-48, 01. [Downloadable!]
Reinganum, Jennifer F., 1989. "The timing of innovation: Research, development, and diffusion," Handbook of Industrial Organization, in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 1, chapter 14, pages 849-908 Elsevier. [Downloadable!] (restricted)
Ralph Siebert & Georg von Graevenitz, 2006. "How Licensing Resolves Hold-Up: Evidence from a Dynamic Panel Data Model with Unobserved Heterogeneity," Discussion Papers 105, SFB/TR 15 Governance and the Efficiency of Economic Systems, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich. [Downloadable!]
Other versions:
- Siebert, Ralph & von Graevenitz, Georg, 2006. "How Licensing Resolves Hold-Up: Evidence from a Dynamic Panel Data Model with Unobserved Heterogeneity," CEPR Discussion Papers 5436, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
Loury, Glenn C, 1979. "Market Structure and Innovation," The Quarterly Journal of Economics, MIT Press, vol. 93(3), pages 395-410, August. [Downloadable!] (restricted)
Other versions:
- Glenn C. Loury, 1976. "Market Structure and Innovation," Discussion Papers 256, Northwestern University, Center for Mathematical Studies in Economics and Management Science. [Downloadable!]
Baye, Michael R. & Hoppe, Heidrun C., 2003. "The strategic equivalence of rent-seeking, innovation, and patent-race games," Games and Economic Behavior, Elsevier, vol. 44(2), pages 217-226, August. [Downloadable!] (restricted)
Beath, John & Katsoulacos, Yannis & Ulph, David, 1989. "Strategic R&D Policy," Economic Journal, Royal Economic Society, vol. 99(395), pages 74-83, Supplemen. [Downloadable!] (restricted)
Katsoulacos, Yannis & Ulph, David, 1998. "Endogenous Spillovers and the Performance of Research Joint Ventures," Journal of Industrial Economics, Blackwell Publishing, vol. 46(3), pages 333-57, September. [Downloadable!] (restricted)

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