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Patent Licensing Networks

Author

Listed:
  • Doh-Shin Jeon

    (Toulouse School of Economics and CEPR)

  • Yassine Lefouili

    (Toulouse School of Economics)

Abstract

This paper investigates the patent licensing networks formed by competing firms. Assuming that licensing agreements can involve the payment of fixed fees only and that firms compete à la Cournot, we show that the complete network is always bilaterally efficient and that the monopoly network is bilaterally efficient if the patents are complementary enough. In the case of independent patents, we fully characterize the bilaterally efficient networks and find that when the cost reduction resulting from getting access to a competitor's technology is large enough, the complete network is the only bilaterally efficient one. We also show that the bilaterally efficient networks can be sustained as subgame-perfect Nash equilibria with symmetric payoffs. This implies that the Pareto-dominance criterion selects the network that maximizes industry profits when more than one bilaterally efficient network exists.

Suggested Citation

  • Doh-Shin Jeon & Yassine Lefouili, 2014. "Patent Licensing Networks," Working Papers 14-16, NET Institute.
    • Handle: RePEc:net:wpaper:1416
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    References listed on IDEAS

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    5. Doh‐Shin Jeon & Yassine Lefouili, 2018. "Cross‐licensing and competition," RAND Journal of Economics, RAND Corporation, vol. 49(3), pages 656-671, September.
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    Cited by:

    1. Doh‐Shin Jeon & Yassine Lefouili, 2018. "Cross‐licensing and competition," RAND Journal of Economics, RAND Corporation, vol. 49(3), pages 656-671, September.

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    More about this item

    Keywords

    Licensing; Networks; Antitrust and Intellectual Property;
    All these keywords.

    JEL classification:

    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices

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