Refusal to Deal, Intellectual Property Rights, and Antitrust
AbstractA vertically integrated firm, having acquired the intellectual property (IP) through innovation to become an input monopolist, can extract surplus by supplying efficient downstream competitors. That the monopolist would refuse to do so is puzzling and has led to numerous debates in antitrust. In this paper, I clarify the economic logic of refusal to deal, and identify conditions under which prohibiting such conduct would raise or lower consumer and social welfare. I further show how IP protection (as determined by IP laws) and restrictions on IP holders' conduct (as determined by antitrust laws) may interact to affect innovation incentive and post-innovation market performance.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 31974.
Date of creation: Jun 2011
Date of revision:
Refusal to Deal; Intellectual Property Rights; IP protection; Antitrust; innovation;
Find related papers by JEL classification:
- O3 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights
- L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
- L4 - Industrial Organization - - Antitrust Issues and Policies
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-07-13 (All new papers)
- NEP-COM-2011-07-13 (Industrial Competition)
- NEP-IND-2011-07-13 (Industrial Organization)
- NEP-INO-2011-07-13 (Innovation)
- NEP-IPR-2011-07-13 (Intellectual Property Rights)
- NEP-REG-2011-07-13 (Regulation)
- NEP-TID-2011-07-13 (Technology & Industrial Dynamics)
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