Patent pool formation: Timing matters

François Lévêque and Yann Ménière ()

Information Economics and Policy, 2011, vol. 23, issue 3, 243-251

Abstract: This paper addresses the problem of non-cooperative patent pool formation by owners of patents related to a standard. We develop a model in which competing manufacturers must license several patents to produce standard-compliant goods. Separate licensing creates a double-marginalization problem. Moreover manufacturers must sink a fixed cost to enter the product market, and thus face a hold-up problem if licensing takes place after their entry. In this setting, the formation of a pool fails when it takes place after entry. Instead, we show that allowing patent owners to commit ex ante on joining a pool is an effective way to trigger the emergence of a stable pool solving both the double-marginalization and hold-up problems. Therefore, patent owners should be encouraged to coordinate their licensing policies on a voluntary basis at early stages in the standard-setting process.

Keywords: Patent; Patent pool; Hold-up; Hold-out; Standard; Double-marginalization (search for similar items in EconPapers)
Date: 2011
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Working Paper: Patent pool formation: Timing matters (2011)
Working Paper: Early commitments help patent pool formation (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:iepoli:v:23:y:2011:i:3:p:243-251

DOI: 10.1016/j.infoecopol.2011.07.002

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