Licensing Complementary Patents and Vertical Integration

Klaus M. Schmidt

No 5987, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: In this paper we investigate the pricing incentives of IP holders and compare the equilibrium royalty rates charged by vertically integrated IP holders with those of non- integrated IP holders. We show that under many circumstances non-integrated companies are likely to charge lower royalties than their vertically integrated counterparts. The results of this paper are of special relevance for the analysis of competition in CDMA and WCDMA technology licensing, where some IP holders are not vertically integrated into handset and infrastructure manufacturing, while others are.

Keywords: complementary patents; IP rights; licensing; vertical integration (search for similar items in EconPapers)
JEL-codes: D43 L15 L41 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com, nep-cse, nep-ind, nep-ino, nep-ipr, nep-mic and nep-net
Date: Written
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