The Effect s of Reduced Transact ion Costs in Licensing

Reiko Aoki and Aaron Schiff ()

Discussion Paper Series from Institute of Economic Research, Hitotsubashi University

Abstract: We focus on downstream uses that combine multiple intellectual property rights and examine the effects of introducing an intellectual property clearinghouse that reduces transaction costs associated with licensing. We show that this causes equilibrium royalties to rise in some cases and may harm licensors due to the etragedy of the anticommonsf. Downstream welfare effects may also be positive or negative and we characterise the effects on downstream manufacturers and final consumers. We also show that total welfare is most likely to increase following a transaction cost reduction when the number of intellectual property rights per downstream use is small, or if rights are relatively substitutable in downstream use, but it is also possible for welfare to decrease.

Keywords: Intellectual property; licensing; tragedy of the anticommons; clearinghouses (search for similar items in EconPapers)
JEL-codes: L24 O34 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-env, nep-ino and nep-ipr
Date: 2007-06

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Persistent link: http://EconPapers.repec.org/RePEc:hit:hituec:a495

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