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Allocation of Legal Costs and Patent Litigation: A Cooperative Game Approach

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Author Info

  • Reiko Aoki

    (Department of Economics, State University of New York at Stony Brook)

  • Jin-Li Hu

    (Department of Industrial Economics, Tamkang University, Taiwan)

Abstract

We compare the bargaining power of the patentee under American and English rules of legal costs allocation. Using the Nash Bargaining Game framework, we show that litigation can be a Pareto efficient outcome. The cooperative game framework allows us to examine how the institutional and market factors influence bargaining powers of plaintiff and defendant under different rules of legal cost allocation, free from assumptions on information and sequence of moves. The American rule renders the patentee more bargaining power when the legal system favors the defendant. An increase in damage reward raises bargaining power of the plaintiff and the settlement rate.

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Bibliographic Info

Paper provided by EconWPA in its series Industrial Organization with number 9612001.

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Length: 35 pages
Date of creation: 13 Dec 1996
Date of revision:
Handle: RePEc:wpa:wuwpio:9612001

Note: Type of Document - postscript and pdf files; prepared on IBM PC ; to print on PostScript or any printer supported by Acrobat; pages: 35 ; figures: included
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Web page: http://128.118.178.162

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Cited by:
  1. Adriana Breccia & Hector Salgado-Banda, 2006. "Competing or Colluding in a Stochastic Environment," Computing in Economics and Finance 2006 423, Society for Computational Economics.
  2. Adriana Breccia & Héctor Salgado Banda, 2005. "Competing or Colluding in a Stochastic Environment," Working Papers 2005-04, Banco de México.
  3. Adriana Breccia & Hector Salgado-Banda, 2005. "Competing or Colluding in a Stochastic Framework," Birkbeck Working Papers in Economics and Finance 0504, Birkbeck, Department of Economics, Mathematics & Statistics.

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