Compulsory licensing, price controls, and access to patented foreign products

Eric Bond and Kamal Saggi

Chapter 19 in Technology Transfer, Foreign Direct Investment, and the Protection of Intellectual Property in the Global Economy, 2023, pp 437-448 from World Scientific Publishing Co. Pte. Ltd.

Abstract: We analyze how a price control and the threat of compulsory licensing (CL) affect consumer access in a developing country (South) to a patented foreign product. In the model, the Southern government sets the level of the price control on a Northern patent-holder who chooses between entry and voluntary licensing (VL). While entry incurs a higher fixed cost, licensed production is of lower quality. If the patent-holder does not work its patent locally, the South is free to use CL. The threat of CL: ensures that consumers have access to (a lower quality version of) the patented good when the patent-holder chooses not to work its patent locally; improves the terms at which VL occurs; can cause the patent-holder to switch from VL to entry; and can delay consumer access when CL replaces VL or entry. We also show that a price control and CL are mutually reinforcing instruments.

Keywords: International Technology Transfer; Multinational Firms; Trips; Foreign Direct Investment; Oligopolistic Competition; Vertical Contracts; Intellectual Property Rights (search for similar items in EconPapers)
JEL-codes: F21 (search for similar items in EconPapers)
Date: 2023
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Related works:
Journal Article: Compulsory licensing, price controls, and access to patented foreign products (2014)
Working Paper: Compulsory licensing, price controls, and access to patented foreign products (2012)
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