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An Empirical Examination Of Patent Holdup

Author

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  • Alexander Galetovic
  • Stephen Haber
  • Ross Levine

Abstract

A large theoretical literature asserts that standard-essential patents (SEPs) allow their owners to “hold up” innovation by charging fees that exceed their incremental contribution to a final product. We evaluate two central, interrelated predictions of this SEP holdup hypothesis: (1) SEP-reliant industries should experience more stagnant quality-adjusted prices than non-SEP-reliant industries; and (2) court decisions that reduce the excessive power of SEP holders should accelerate innovation in SEP-reliant industries. We find no empirical support for either prediction. Indeed, SEP-reliant industries have the fastest quality-adjusted price declines in the U.S. economy.

Suggested Citation

  • Alexander Galetovic & Stephen Haber & Ross Levine, 2015. "An Empirical Examination Of Patent Holdup," Journal of Competition Law and Economics, Oxford University Press, vol. 11(3), pages 549-578.
    • Handle: RePEc:oup:jcomle:v:11:y:2015:i:3:p:549-578.
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    File URL: http://hdl.handle.net/10.1093/joclec/nhv024
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    Citations

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    Cited by:

    1. Shufen Tang & Yuqing Zheng & Taiping Li & Li Zhou, 2021. "The hold‐up problem in China's broiler industry: Empirical evidence from Jiangsu Province," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 69(4), pages 539-554, December.
    2. Justus Baron & Jorge Contreras & Martin Husovec & Pierre Larouche, 2019. "Making the Rules: The Governance of Standard Development Organizations and their Policies on Intellectual Property Rights," JRC Research Reports JRC115004, Joint Research Centre.
    3. Gamarra, Yanis & Friedl, Gunther, 2022. "Firms' Involvement in Standardization and Average Total Costs per Patent Family," 31st European Regional ITS Conference, Gothenburg 2022: Reining in Digital Platforms? Challenging monopolies, promoting competition and developing regulatory regimes 265630, International Telecommunications Society (ITS).
    4. Teece, David J., 2018. "Profiting from innovation in the digital economy: Enabling technologies, standards, and licensing models in the wireless world," Research Policy, Elsevier, vol. 47(8), pages 1367-1387.
    5. Vincent Jerald R. Ramos & Sarah Lynne S. Daway-Ducanes, 2025. "Nonlinearities in the Intellectual Property-Manufacturing Growth Nexus in the Post-TRIPS Era: Evidence from a Dynamic Panel Analysis," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 16(2), pages 10164-10194, June.
    6. Baron, Justus, 2020. "Counting standard contributions to measure the value of patent portfolios - A tale of apples and oranges," Telecommunications Policy, Elsevier, vol. 44(3).
    7. Brian J Love & Yassine Lefouili & Christian Helmers, 2023. "Do Standard-Essential Patent Owners Behave Opportunistically? Evidence From U.S. District Court Dockets," American Law and Economics Review, American Law and Economics Association, vol. 25(1), pages 300-337.
    8. Blind, Knut, 2025. "Standardization and Standards: Safeguards of Technological Sovereignty?," Technological Forecasting and Social Change, Elsevier, vol. 210(C).
    9. Fiedler, Clemens & Larrain, Maria & Prüfer, Jens, 2023. "Membership, governance, and lobbying in standard-setting organizations," Research Policy, Elsevier, vol. 52(6).
    10. Helmers, Christian & Love, Brian J., 2024. "Patent law reform and innovation: An empirical assessment of the last 20 years," International Review of Law and Economics, Elsevier, vol. 79(C).
    11. Kwon, Seokbeom, 2020. "How does patent transfer affect innovation of firms?," Technological Forecasting and Social Change, Elsevier, vol. 154(C).

    More about this item

    JEL classification:

    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy

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