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Intellectual Property, Antitrust, and Strategic Behavior

In: Innovation Policy and the Economy, Volume 3

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  • Dennis W. Carlton
  • Robert H. Gertner

Abstract

Economic growth depends in large part on technological change. Laws governing intellectual property rights protect inventors from competition in order to create incentives for them to innovate. Antitrust laws constrain how a monopolist can act in order to maintain its monopoly in an attempt to foster competition. There is a fundamental tension between these two different types of laws. Attempts to adapt static antitrust analysis to a setting of dynamic R&D competition through the use of 'innovation markets' are likely to lead to error. Applying standard antitrust doctrines such as tying and exclusivity to R&D settings is likely to be complicated. Only detailed study of the industry of concern has the possibility of uncovering reliable relationships between innovation and industry behavior. One important form of competition, especially in certain network industries, is between open and closed systems. We have presented an example to illustrate how there is a tendency for systems to close even though an open system is socially more desirable. Rather than trying to use the antitrust laws to attack the maintenance of closed systems, an alternative approach would be to use intellectual property laws and regulations to promote open systems and the standard setting organizations that they require. Recognition that optimal policy toward R&D requires coordination between the antitrust and intellectual property laws is needed.
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Suggested Citation

  • Dennis W. Carlton & Robert H. Gertner, 2003. "Intellectual Property, Antitrust, and Strategic Behavior," NBER Chapters,in: Innovation Policy and the Economy, Volume 3, pages 29-60 National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberch:10792
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Christine Greenhalgh & Padraig Dixon, 2002. "The Economics of Intellectual Property: A Review to Identify Themes for Future Research," Economics Series Working Papers 135, University of Oxford, Department of Economics.
    2. Seifert, Jacob, 2013. "Compulsory Licensing, Innovation and Welfare," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79778, Verein für Socialpolitik / German Economic Association.
    3. Duso, Tomaso & Gugler, Klaus & Yurtoglu, Burcin B., 2011. "How effective is European merger control?," European Economic Review, Elsevier, vol. 55(7), pages 980-1006.
    4. Leonardo Burlamaqui, 2006. "How Should Competition Policies and Intellectual Property Issues Interact in a Globalised World? A Schumpeterian Perspective," The Other Canon Foundation and Tallinn University of Technology Working Papers in Technology Governance and Economic Dynamics 06, TUT Ragnar Nurkse School of Innovation and Governance.
    5. Peter Møllgaard & Jo Lorentzen, 2005. "Competition Policy and Innovation," CIE Discussion Papers 2005-12, University of Copenhagen. Department of Economics. Centre for Industrial Economics.
    6. Giovanni B. Ramello, 2002. "Copyright and Antitrust Issues," LIUC Papers in Economics 114, Cattaneo University (LIUC).
    7. Dennis W. Carlton & Ken Heyer, 2008. "Appropriate Antitrust Policy Towards Single-Firm Conduct," EAG Discussions Papers 200802, Department of Justice, Antitrust Division.
    8. Jochen Lorentzen & Peter Møllgaard, 2006. "Competition Policy and Innovation," Chapters,in: International Handbook on Industrial Policy, chapter 6 Edward Elgar Publishing.
    9. Dennis W. Carlton, 2007. "Does Antitrust Need to be Modernized?," Journal of Economic Perspectives, American Economic Association, pages 155-176.
    10. Rockett, Katharine, 2010. "Property Rights and Invention," Handbook of the Economics of Innovation, Elsevier.
    11. Jacob Seifert, 2015. "Welfare effects of compulsory licensing," Journal of Regulatory Economics, Springer, pages 317-350.
    12. Møllgaard, Peter & Lorentzen, Jo, 2006. "Competition Policy and Innovation," Working Papers 09-2005, Copenhagen Business School, Department of Economics.
    13. Klaus Kultti & Tuomas Takalo & Juuso Toikka, 2005. "Patents Hinder Collusion," Industrial Organization 0503015, EconWPA.
    14. Shastitko, A. & Kurdin, A., 2014. "Protection of Intellectual Property Rights and Competition Policy: Seeking for a Better Balance," Journal of the New Economic Association, New Economic Association, vol. 21(1), pages 111-135.
    15. Dennis W. Carlton, 2007. "Does Antitrust Need to be Modernized?," EAG Discussions Papers 200703, Department of Justice, Antitrust Division.

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