Patent Licensing Networks

Patent Licensing Networks

Date: 2014-09
By: Doh-Shin Jeon (Toulouse School of Economics and CEPR)
Yassine Lefouili (Toulouse School of Economics)
URL: http://d.repec.org/n?u=RePEc:net:wpaper:1416&r=net
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.
Keywords: Licensing; Networks; Antitrust and Intellectual Property
JEL: L12 L13 L41

Cross-Licensing and Competition

Date: 2013-09
By: Doh-Shin Jeon (Toulouse School of Economics)
Yassine Lefouili (Toulouse School of Economics)
URL: http://d.repec.org/n?u=RePEc:net:wpaper:1311&r=net
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.
Keywords: Cross-Licensing, Collusion, Antitrust and Intellectual Property
JEL: L44 O33 O34