Jostling for Advantage: Licensing and Entry into Patent Portfolio Races

Ralph Siebert and Georg von Graevenitz

Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems from Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich

Abstract: Licensing in a patent thicket allows firms to either avoid or resolve hold-up. Firms' R&D incentives depend on whether they license ex ante or ex post. We develop a model of a patent portfolio race, which allows for endogenous R&D efforts, to study firms' choice between ex ante and ex post licensing. The model shows that firms' relationships in product markets and technology space jointly determine the type of licensing contract chosen. In particular, product market competitors are more likely to avoid patent portfolio races, since the threat of hold-up increases. On the other hand, more valuable technologies are more likely to give rise to patent portfolio races. We also discuss the welfare implications of these results.

Keywords: hold-up problem; licensing; innovation; patent race; patent thicket; research joint ventures (search for similar items in EconPapers)
JEL-codes: L13 L49 L63 (search for similar items in EconPapers)
Date: 2006-09
New Economics Papers: this item is included in nep-com, nep-ino, nep-ipr, nep-pr~, nep-mic and nep-tid
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Working Paper: Jostling for Advantage: Licensing and Entry into Patent Portfolio Races (2006)
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