Abuse of Dominance and Licensing of Intellectual Property
AbstractWe examine the impact of the licensing policies of one or more upstream owners of essential intellectual property (IP hereafter) on the variety offered by a downstream industry, as well as on consumers and social welfare. When an upstream monopoly owner of essential IP increases the number of licenses, it enhances product variety, adding to consumer value, but it also intensifies downstream competition, and thus dissipates profits. As a result, the upstream IP monopoly may want to provide too many or too few licenses, relatively to what maximizes consumer surplus or social welfare. With multiple owners of essential IP, royalty stacking increases aggregate licensing fees and thus tends to limit the number of licensees, which can also reduce downstream prices for consumers. We characterize the conditions under which these reductions in downstream prices and variety is beneficial to consumers or society.
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Bibliographic InfoPaper provided by Institut d'Économie Industrielle (IDEI), Toulouse in its series IDEI Working Papers with number 712.
Date of creation: Apr 2012
Date of revision:
Publication status: Published in International Journal of Industrial Organization, vol. 30, n°6, 2012, p. 518-257.
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Intellectual property; licensing policy; vertical integration; patent pools.;
Other versions of this item:
- Rey, Patrick & Salant, David, 2012. "Abuse of dominance and licensing of intellectual property," International Journal of Industrial Organization, Elsevier, vol. 30(6), pages 518-527.
- Rey, Patrick & Salant, David, 2012. "Abuse of Dominance and Licensing of Intellectual Property," TSE Working Papers 12-297, Toulouse School of Economics (TSE).
- Rey, Patrick & Salant, David, 2008. "Abuse of Dominance and Licensing of Intellectual Property," MPRA Paper 9454, University Library of Munich, Germany.
- L4 - Industrial Organization - - Antitrust Issues and Policies
- L5 - Industrial Organization - - Regulation and Industrial Policy
- O3 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-05-08 (All new papers)
- NEP-COM-2012-05-08 (Industrial Competition)
- NEP-INO-2012-05-08 (Innovation)
- NEP-IPR-2012-05-08 (Intellectual Property Rights)
- NEP-MIC-2012-05-08 (Microeconomics)
- NEP-TID-2012-05-08 (Technology & Industrial Dynamics)
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