Patent Pools and Product Development
AbstractThe conventional wisdom is that the formation of patent pools is welfare enhancing when patents are complementary, since the pool avoids a double-marginalization problem associated with independent licensing. The focus of this paper is on (downstream) product development and commercialization on the basis of perfectly complementary patents. We consider development technologies that entail spillovers between rivals, and assume that nal demand products are imperfect substitutes. If pool formation either increases spillovers in development or decreases the degree of product di erentiation, pool formation can actually adversely a ect overall welfare by reducing incentives towards product development and product market competition|even with perfectly complementary patents. This significantly modifies and possibly even negates the conventional wisdom for many settings. The paper provides insights into why patent pools are uncommon in science-based industries such as biotech, despite there being strong policy advocacy for them.
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Bibliographic InfoPaper provided by Towson University, Department of Economics in its series Working Papers with number 2011-02.
Length: 37 pages
Date of creation: Feb 2011
Date of revision: Feb 2011
Patent Pools; Research and Development; Innovation; BioTechnology; Electronics.;
Find related papers by JEL classification:
- L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
- L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
- L4 - Industrial Organization - - Antitrust Issues and Policies
- L6 - Industrial Organization - - Industry Studies: Manufacturing
- D2 - Microeconomics - - Production and Organizations
- D4 - Microeconomics - - Market Structure and Pricing
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-03-12 (All new papers)
- NEP-COM-2011-03-12 (Industrial Competition)
- NEP-IND-2011-03-12 (Industrial Organization)
- NEP-INO-2011-03-12 (Innovation)
- NEP-IPR-2011-03-12 (Intellectual Property Rights)
- NEP-TID-2011-03-12 (Technology & Industrial Dynamics)
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.:
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