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Patent pools, vertical integration, and downstream competition


  • Markus Reisinger
  • Emanuele Tarantino


Patent pools are commonly used to license technologies to manufacturers. Whereas previous studies focused on manufacturers active in independent markets, we analyze pools licensing to competing manufacturers, allowing for multiple licensors and nonlinear tariffs. We find that the impact of pools on welfare depends on the industry structure: whereas they are procompetitive when no manufacturer is integrated with a licensor, the presence of vertically integrated manufacturers triggers a novel trade‐off between horizontal and vertical price coordination. Specifically, pools are anticompetitive if the share of integrated firms is large, procompetitive otherwise. We then formulate information‐free policies to screen anticompetitive pools.

Suggested Citation

  • Markus Reisinger & Emanuele Tarantino, 2019. "Patent pools, vertical integration, and downstream competition," RAND Journal of Economics, RAND Corporation, vol. 50(1), pages 168-200, March.
  • Handle: RePEc:bla:randje:v:50:y:2019:i:1:p:168-200
    DOI: 10.1111/1756-2171.12266

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    Cited by:

    1. Nie, Pu-yan & Chen, Zi-rui & Wang, Chan, 2021. "Intellectual property pricing under asymmetric duopoly," Journal of Retailing and Consumer Services, Elsevier, vol. 58(C).
    2. Tesoriere, Antonio, 2019. "Stable sharing rules and participation in pools of essential patents," Games and Economic Behavior, Elsevier, vol. 117(C), pages 40-58.
    3. Joachim Heinzel & Simon Hoof, 2020. "Oligopolistic Upstream Competition with Differentiated Inputs," Working Papers CIE 129, Paderborn University, CIE Center for International Economics.

    More about this item

    JEL classification:

    • K11 - Law and Economics - - Basic Areas of Law - - - Property Law
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
    • L42 - Industrial Organization - - Antitrust Issues and Policies - - - Vertical Restraints; Resale Price Maintenance; Quantity Discounts
    • 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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