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Dark Sides of Patent Pools with Compulsory Independent Licensing

  • Akifumi Ishihara

    (Kyoto University)

  • Noriyuki Yanagawa

    (The University of Tokyo)

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    This paper examines roles of patent pools with compulsory independent licensing. A seminal work by Lerner and Tirole (2004) have shown that requiring independent licensing or compulsory independent licensing is a useful tool to select only desirable patent pools. In this paper, however, we are going to show that their argument is not always true, If there are users who demand only a part of the pooled technologies, the compulsory independent licensing gives a tool for price discrimination for the patent holders, and that is welfare decreasing under some conditions. Moreover, the compulsory independent licensing may promote entry deterrence when there are lower grade entrants. Even in this sense, compulsory independent licensing decreases social welfare. The welfare under the patent pool with independent licensing may become lower than that under the competitive licensing.

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    Paper provided by Center for Advanced Research in Finance, Faculty of Economics, The University of Tokyo in its series CARF F-Series with number CARF-F-318.

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    Length: 42 pages
    Date of creation: May 2013
    Date of revision:
    Handle: RePEc:cfi:fseres:cf318
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