Early commitments help patent pool formation
This paper explores in what circumstances patent owners can be expected to join unilaterally a patent pool. We develop a simple model in which owners of patents reading on a standard grant licences to competing manufacturers. Manufacturers must sink a fixed cost to enter the market for standard compliant products, and are thus exposed to a hold up when royalties are set after their entry. We show that the formation of non-cooperative patent pools nearly always fails if it takes place once manufacturers have incurred fixed costs - as is usually the case. By contrast, allowing the formation of patent pools ex ante facilitates the emergence of stable non-cooperative patent pools. Such ex ante pools yield lower prices and higher licensing profits than ex post patent pools would. We discuss the policy implications of these results concerning the credibilty of licensing commitments required by standard setting bodies.
|Date of creation:||Jul 2008|
|Note:||June 17, 2008|
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- Josh Lerner & Marcin Strojwas & Jean Tirole, 2007.
"The design of patent pools: the determinants of licensing rules,"
RAND Journal of Economics,
RAND Corporation, vol. 38(3), pages 610-625, 09.
- Lerner, Josh & Strojwas, Marcin & Tirole, Jean, 2005. "The Design of Patent Pools: The Determinants of Licensing Rules," IDEI Working Papers 187, Institut d'Économie Industrielle (IDEI), Toulouse.
- Josh Lerner & Jean Tirole, 2004. "Efficient Patent Pools," American Economic Review, American Economic Association, vol. 94(3), pages 691-711, June.
- Josh Lerner & Jean Tirole, 2002. "Efficient Patent Pools," NBER Working Papers 9175, National Bureau of Economic Research, Inc.
- Lerner, Josh & Tirole, Jean, 2003. "Efficient Patent Pools," IDEI Working Papers 211, Institut d'Économie Industrielle (IDEI), Toulouse.
- "Aoki, Reiko" & "Nagaoka, Sadao", 2004. "The Consortium Standard and Patent Pools," Economic Review, Hitotsubashi University, vol. 55(4), pages 345-357, January.
- Aoki, Reiko & Nagaoka, Sadao, 2004. "The Consortium Standard and Patent Pools," Discussion Paper 222, Center for Intergenerational Studies, Institute of Economic Research, Hitotsubashi University.
- Reiko Aoki & Sadao Nagaoka, 2004. "The Consortium Standard and Patent Pools," Hi-Stat Discussion Paper Series d04-32, Institute of Economic Research, Hitotsubashi University.
- Reiko Aoki; Sadao Nagaoka, 2004. "The Consortium Standard and Patent Pools," Econometric Society 2004 Far Eastern Meetings 788, Econometric Society.
- Lemley, Mark A & Shapiro, Carl, 2007. "Patent Hold-Up and Royalty Stacking," Competition Policy Center, Working Paper Series qt8638s257, Competition Policy Center, Institute for Business and Economic Research, UC Berkeley.
- Steffen Brenner, 2009. "Optimal formation rules for patent pools," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 40(3), pages 373-388, September.
- Bloch, Francis, 2002. "Coalitions and Networks in Industrial Organization," Manchester School, University of Manchester, vol. 70(1), pages 36-55, January.
- Sung-Hwan Kim, 2004. "Vertical Structure and Patent Pools," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 25(3), pages 231-250, 07. Full references (including those not matched with items on IDEAS)
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