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Refusal to Deal, Intellectual Property Rights, and Antitrust

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  • Chen, Yongmin

Abstract

A vertically integrated firm, having acquired the intellectual property (IP) through innovation to become an input monopolist, can extract surplus by supplying efficient downstream competitors. That the monopolist would refuse to do so is puzzling and has led to numerous debates in antitrust. In this paper, I clarify the economic logic of refusal to deal, and identify conditions under which prohibiting such conduct would raise or lower consumer and social welfare. I further show how IP protection (as determined by IP laws) and restrictions on IP holders' conduct (as determined by antitrust laws) may interact to affect innovation incentive and post-innovation market performance.

Suggested Citation

  • Chen, Yongmin, 2011. "Refusal to Deal, Intellectual Property Rights, and Antitrust," MPRA Paper 31974, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:31974
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    References listed on IDEAS

    as
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    Cited by:

    1. Jacob Seifert, 2015. "Welfare effects of compulsory licensing," Journal of Regulatory Economics, Springer, vol. 48(3), pages 317-350, December.

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    More about this item

    Keywords

    Refusal to Deal; Intellectual Property Rights; IP protection; Antitrust; innovation;
    All these keywords.

    JEL classification:

    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • L4 - Industrial Organization - - Antitrust Issues and Policies

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