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An Economic Interpretation Of Frand


  • Dennis W. Carlton
  • Allan L. Shampine


Standard-setting organizations have, for many years, required members to commit to license patents essential to use of standards on fair, reasonable, and non-discriminatory (FRAND) terms. Unfortunately, SSOs have not defined what FRAND means, leaving its interpretation to courts and regulators. This article explains the economic concerns underlying FRAND—hold-up and strategic behavior, leading to inefficient behavior in a standard-setting context—and how a proper economic interpretation of FRAND can eliminate or mitigate those concerns. Ex ante analyses based on the “reasonable” principle can potentially eliminate hold-up, but, as a practical matter, may be costly, difficult to perform, and error-prone. In such circumstances, the “non-discriminatory” principle of FRAND can provide some protection against hold-up even when the “reasonable” principle of FRAND does not.

Suggested Citation

  • Dennis W. Carlton & Allan L. Shampine, 2013. "An Economic Interpretation Of Frand," Journal of Competition Law and Economics, Oxford University Press, vol. 9(3), pages 531-552.
  • Handle: RePEc:oup:jcomle:v:9:y:2013:i:3:p:531-552.

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    Cited by:

    1. Jong-Hee Hahn & Chan KIm, 2018. "Input price discrimination with differentiated final products," Working papers 2018rwp-118, Yonsei University, Yonsei Economics Research Institute.
    2. repec:taf:glecrv:v:45:y:2016:i:3:p:233-250 is not listed on IDEAS
    3. Jay Pil Choi, 2016. "FRAND Royalties and Injunctions for Standard Essential Patents," Global Economic Review, Taylor & Francis Journals, vol. 45(3), pages 233-250, July.

    More about this item

    JEL classification:

    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights


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