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Cooperating with the Competition: Efficient Patent Pooling and the Choice of a New Standard

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  • Gallini, Nancy

Abstract

I examine the private and social efficiency of patent pools in a setting in which owners of intellectual property (IP), are both vertically and horizontally related. The relationship is vertical through the ownership of complementary IP and horizontal in that at least one member owns a competing product. For this hybrid structure – referred to as overlapping ownership – I analyze the interplay between two organizational decisions: the standard-setting process in which participants choose a product type (indexed by its differentiation from the current standard), and the subsequent patent pooling decision. Consumers can be better off with patent pooling as a result of lower prices (the complements effect) and greater product variety (the differentiation effect), even when a pool member is also a competitor of the new standard. However, in comparing new product collaborations across ownership regimes, consumers prefer those that admit no overlapping ownership. These results yield insights for antitrust rules promoting efficient IP agreements.

Suggested Citation

  • , & Gallini, Nancy, 2014. "Cooperating with the Competition: Efficient Patent Pooling and the Choice of a New Standard," Economics working papers nancy_gallini-2014-2, Vancouver School of Economics, revised 06 Jan 2014.
  • Handle: RePEc:ubc:bricol:nancy_gallini-2014-2
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    File URL: http://www.economics.ubc.ca/faculty-and-staff/nancy-gallini/
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    Cited by:

    1. Alex Barrachina & Eduardo Jiménez-Fernández, 2016. "Intertemporal strategic investment-consumption model: An example," Working Papers 2016/13, Economics Department, Universitat Jaume I, Castellón (Spain).
    2. Justus Baron & Henry Delcamp, 2015. "The strategies of patent introduction into patent pools," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 24(8), pages 776-800, November.

    More about this item

    Keywords

    Intellectual Property; Industrial Organization; Patent Pools; Standards; Antitrust;

    JEL classification:

    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
    • L44 - Industrial Organization - - Antitrust Issues and Policies - - - Antitrust Policy and Public Enterprise, Nonprofit Institutions, and Professional Organizations

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