How Antitrust Enforcement Can Spur Innovation: Bell Labs and the 1956 Consent Decree

Martin Watzinger, Thomas A. Fackler, Markus Nagler and Monika Schnitzer ()

American Economic Journal: Economic Policy, 2020, vol. 12, issue 4, 328-59

Abstract: Is compulsory licensing an effective antitrust remedy to increase innovation? To answer this question, we analyze the 1956 consent decree that settled an antitrust lawsuit against Bell, a vertically integrated monopolist charged with foreclosing the telecommunications equipment market. Bell was forced to license all its existing patents royalty-free, including those not related to telecommunications. We identify the effect of the consent decree on follow-on innovations building on Bell patents by using exactly matched non-Bell patents as control group. We show that the consent decree led to a lasting increase in innovation but only in markets outside the telecommunications sector.

JEL-codes: D45 K21 L12 L24 L63 O31 O34 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (18)

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Related works:
Working Paper: How Antitrust Enforcement Can Spur Innovation: Bell Labs and the 1956 Consent Decree (2020)
Working Paper: How Antitrust Enforcement Can Spur Innovation: Bell Labs and the 1956 Consent Decree (2017)
Working Paper: How Antitrust Enforcement Can Spur Innovation: Bell Labs and the 1956 Consent Decree (2017)
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DOI: 10.1257/pol.20190086

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