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Cross-Licensing and Competition

Author

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  • Doh-Shin Jeon

    () (Toulouse School of Economics)

  • Yassine Lefouili

    () (Toulouse School of Economics)

Abstract

We study bilateral cross-licensing agreements among N(> 2) firms that engage in competition after the licensing phase. It is shown that the most collusive cross-licensing royalty, i.e. the one that allows the industry to achieve the monopoly profit, is sustainable as the outcome of bilaterally efficient agreements. When the terms of the agreements are not observable to third parties, the monopoly royalty is the unique symmetric bilaterally efficient royalty. However, when the terms of the agreements are public, the most competitive royalty (i.e. zero) can also be bilaterally efficient. Policy implications regarding the antitrust treatment of cross-licensing agreements are derived from these results.

Suggested Citation

  • Doh-Shin Jeon & Yassine Lefouili, 2013. "Cross-Licensing and Competition," Working Papers 13-11, NET Institute.
  • Handle: RePEc:net:wpaper:1311
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    References listed on IDEAS

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    1. William Novshek, 1985. "On the Existence of Cournot Equilibrium," Review of Economic Studies, Oxford University Press, vol. 52(1), pages 85-98.
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    8. Priest, George L, 1977. "Cartels and Patent License Arrangements," Journal of Law and Economics, University of Chicago Press, vol. 20(2), pages 309-377, October.
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    More about this item

    Keywords

    Cross-Licensing; Collusion; Antitrust and Intellectual Property;

    JEL classification:

    • L44 - Industrial Organization - - Antitrust Issues and Policies - - - Antitrust Policy and Public Enterprise, Nonprofit Institutions, and Professional Organizations
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital

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