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Cross‐licensing and competition

Author

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  • Doh‐Shin Jeon
  • Yassine Lefouili

Abstract

We analyze the competitive effects of bilateral cross‐licensing agreements in a setting with many competing firms. We show that firms can sustain the monopoly outcome if they can sign unconstrained bilateral cross‐licensing contracts. This result is robust to increasing the number of firms who can enter into a cross‐licensing agreement. We also investigate the scenario in which a cross‐licensing contract cannot involve the payment of a royalty by a licensee who decides ex post not to use the licensed technology. Finally, policy implications regarding the antitrust treatment of cross‐licensing agreements are derived.

Suggested Citation

  • Doh‐Shin Jeon & Yassine Lefouili, 2018. "Cross‐licensing and competition," RAND Journal of Economics, RAND Corporation, vol. 49(3), pages 656-671, September.
    • Handle: RePEc:bla:randje:v:49:y:2018:i:3:p:656-671
    DOI: 10.1111/1756-2171.12248
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    Cited by:

    1. Jeon, Doh-Shin & Lefouili, Yassine, 2020. "Decentralizing Cooperation through Upstream Bilateral Agreements," CEPR Discussion Papers 14974, C.E.P.R. Discussion Papers.
    2. Fu, Xiao & Tan, Guofu, 2025. "Competition and cooperation in international air travel markets with complements and substitutes," International Journal of Industrial Organization, Elsevier, vol. 103(PB).
    3. Nicolas Aguelakakis & Aleksandr Yankelevich, 2019. "Collaborate Or Consolidate: Assessing The Competitive Effects Of Production Joint Ventures," Economic Inquiry, Western Economic Association International, vol. 57(1), pages 73-84, January.
    4. Chiu Yu Ko & Xuyao Zhang, 2020. "Research joint venture with technology transfer," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 53(1), pages 341-358, February.
    5. Van Moer, Geert, 2019. "Electricity market competition when forward contracts are pairwise efficient," MPRA Paper 96660, University Library of Munich, Germany.
    6. Atle Haugen & Steffen Juranek, 2023. "Classroom experiments on technology licensing: Royalty stacking, cross-licensing, and patent pools," The Journal of Economic Education, Taylor & Francis Journals, vol. 54(2), pages 113-125, April.
    7. Seyed H. Hosseini & Richard Gray & Mohammad Torshizi, 2019. "Cross‐licensing agreements in presence of technological improvements," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 67(1), pages 115-130, March.
    8. Kevin A. Bryan & Erik Hovenkamp, 2020. "Antitrust Limits on Startup Acquisitions," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 56(4), pages 615-636, June.
    9. Zhang, Qi & Zhu, Xide & Lin, Gui-Hua, 2024. "Green technological licensing strategies with fixed-fee among rival firms under emissions trading scheme," European Journal of Operational Research, Elsevier, vol. 318(1), pages 110-130.
    10. Doh-Shin Jeon & Yassine Lefouili, 2014. "Patent Licensing Networks," Working Papers 14-16, NET Institute.
    11. Choi, Jay Pil & Gerlach, Heiko, 2019. "Optimal cross-licensing arrangements: Collusion versus entry deterrence," European Economic Review, Elsevier, vol. 120(C).
    12. Fu, Xiao & Tan, Guofu, 2024. "Double markups under bilateral vertical contracting," Economics Letters, Elsevier, vol. 237(C).

    More about this item

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • L24 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Contracting Out; Joint Ventures
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital

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