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Intellectual property clearinghouses: The effects of reduced transaction costs in licensing

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  • Aoki, Reiko
  • Schiff, Aaron

Abstract

We focus on downstream uses of intellectual property (IP) that combine multiple rights and examine the effects of introducing an IP clearinghouse. We identify the two sometimes conflicting functions of clearinghouses: transaction cost reductions and coordination. We show that reduced transaction costs cause licensors to raise royalties in some cases, which makes them worse off due to the [`]tragedy of the anticommons'. Downstream welfare effects may also be positive or negative and we characterize the effects on downstream manufacturers and final consumers. We also show that total welfare is most likely to increase following a transaction cost reduction when the number of intellectual property rights per downstream use is small, or if rights are relatively substitutable in downstream use, but it is also possible for welfare to decrease.

Suggested Citation

  • Aoki, Reiko & Schiff, Aaron, 2010. "Intellectual property clearinghouses: The effects of reduced transaction costs in licensing," Information Economics and Policy, Elsevier, vol. 22(3), pages 218-227, July.
  • Handle: RePEc:eee:iepoli:v:22:y:2010:i:3:p:218-227
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    Cited by:

    1. Ghafele, Roya & Gibert, Benjamin, 2011. "The Transaction Cost Benefits of Electronic Patent Licensing Platforms: A Discussion at the Example of the PatentBooks Model," MPRA Paper 36010, University Library of Munich, Germany, revised 10 Jan 2012.
    2. Gastón Llanes & Joaquín Poblete, 2014. "Ex Ante Agreements in Standard Setting and Patent‐Pool Formation," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 23(1), pages 50-67, March.

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    More about this item

    Keywords

    Intellectual property Licensing Tragedy of the anticommons Clearinghouses;

    JEL classification:

    • L24 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Contracting Out; Joint Ventures
    • 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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