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Merging To License: Internal Vs. External Patentee

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Author Info
Ramón Faulí-Oller () (Universidad de Alicante)
Joel Sandonís () (Universidad de Alicante)
Abstract

In this paper, we endogenize the decision of a research laboratory that owns a patented process innovation on whether to remain independent as an external patentee or to merge with a manufacturing firm, becoming an internal to the industry patentee. We show that a merger is profitable only for the case of small innovations whereas only large innovations make it welfare improving. As a consequence, the antitrust authority should forbid all (profitable) mergers.

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File URL: http://www.ivie.es/downloads/docs/wpasad/wpasad-2003-17.pdf
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File Function: Fisrt version / Primera version, 2003
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Publisher Info
Paper provided by Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie) in its series Working Papers. Serie AD with number 2003-17.

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Length: 22 pages
Date of creation: May 2003
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Publication status: Published by Ivie
Handle: RePEc:ivi:wpasad:2003-17

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Related research
Keywords: Patent licensing two-part tariff contracts external vs. internal patentee

Find related papers by JEL classification:
D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
D45 - Microeconomics - - Market Structure and Pricing - - - Rationing; Licensing
L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices

References listed on IDEAS
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  1. Kamien, Morton I & Tauman, Yair, 1986. "Fees versus Royalties and the Private Value of a Patent," The Quarterly Journal of Economics, MIT Press, vol. 101(3), pages 471-91, August. [Downloadable!] (restricted)
  2. Nirvikar Singh & Xavier Vives, 1984. "Price and Quantity Competition in a Differentiated Duopoly," RAND Journal of Economics, The RAND Corporation, vol. 15(4), pages 546-554, Winter. [Downloadable!] (restricted)
  3. Michael L. Katz & Carl Shapiro, 1985. "On the Licensing of Innovations," RAND Journal of Economics, The RAND Corporation, vol. 16(4), pages 504-520, Winter. [Downloadable!] (restricted)
  4. Wang, X Henry & Yang, Bill Z, 1999. "On Licensing under Bertrand Competition," Australian Economic Papers, Blackwell Publishing, vol. 38(2), pages 106-19, June. [Downloadable!] (restricted)
  5. Kamien, Morton I. & Oren, Shmuel S. & Tauman, Yair, 1992. "Optimal licensing of cost-reducing innovation," Journal of Mathematical Economics, Elsevier, vol. 21(5), pages 483-508. [Downloadable!] (restricted)
  6. Katz, Michael L & Shapiro, Carl, 1986. "How to License Intangible Property," The Quarterly Journal of Economics, MIT Press, vol. 101(3), pages 567-89, August. [Downloadable!] (restricted)
  7. Kamien, Morton I & Tauman, Yair, 2002. "Patent Licensing: The Inside Story," Manchester School, University of Manchester, vol. 70(1), pages 7-15, January. [Downloadable!] (restricted)
  8. Kamien, Morton I., 1992. "Patent licensing," Handbook of Game Theory with Economic Applications, in: R.J. Aumann & S. Hart (ed.), Handbook of Game Theory with Economic Applications, edition 1, volume 1, chapter 11, pages 331-354 Elsevier. [Downloadable!] (restricted)
  9. Macho, I. & Martinez-Giralt, X. & Perez-Castrillo, D., 1993. "The Role of Information in Licensing Contract Design," UFAE and IAE Working Papers 216.93, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
    Other versions:
  10. Ana I. Saracho, 2002. "Patent Licensing Under Strategic Delegation," Journal of Economics & Management Strategy, Blackwell Publishing, vol. 11(2), pages 225-251, 06. [Downloadable!] (restricted)
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