Abuse of Dominance and Licensing of Intellectual Property

Rey, Patrick and Salant, David (2012) Abuse of Dominance and Licensing of Intellectual Property. International Journal of Industrial Organization, 30 (n°6). pp. 518-257.

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Official URL: http://tse-fr.eu/pub/27095

Abstract

We examine the impact of the licensing policies of one or more upstream owners of essential intellectual property (IP hereafter) on the variety offered by a downstream industry, as well as on consumers and social welfare. When an upstream monopoly owner of essential IP increases the number of licenses, it enhances product variety, adding to consumer value, but it also intensifies downstream competition, and thus dissipates profits. As a result, the upstream IP monopoly may want to provide too many or too few licenses, relatively to what maximizes consumer surplus or social welfare.
With multiple owners of essential IP, royalty stacking increases aggregate licensing fees and thus tends to limit the number of licensees, which can also reduce downstream prices for consumers. We characterize the conditions under which these reductions in downstream prices and variety is beneficial to consumers or society.

Item Type: Article
Language: English
Date: 2012
Refereed: Yes
Uncontrolled Keywords: Intellectual property, licensing policy, vertical integration, patent pools
JEL codes: L4 - Antitrust Issues and Policies
L5 - Regulation and Industrial Policy
O3 - Technological Change; Research and Development
Subjects: B- ECONOMIE ET FINANCE
Divisions: TSE-R (Toulouse)
Site: UT1
Date Deposited: 09 Jul 2014 17:34
Last Modified: 09 Apr 2018 08:39
OAI ID: oai:tse-fr.eu:27095
URI: http://publications.ut-capitole.fr/id/eprint/15582

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