 Fragmented property rights and royalty bargainingDerek J. Clark and Jean-Christophe Pereau Journal of Economic Behavior & Organization, 2009, vol. 72, issue 1, 546-553 Abstract: We consider production by a firm that relies on the patent rights that are held by other actors. Before production can take place, bargains have to be struck with each patent holder over the royalty per unit produced. In the negotiations, a patent holder must be mindful of the fact that a large royalty will increase the product price and lower demand for the final product. Hence each patent holder would prefer to gain a large royalty at the expense of rivals. When the producer makes the first offer in an alternating offer framework, we analyze whether it should conduct negotiations sequentially with some grouping of patent holders or simultaneously. We demonstrate that the producer will prefer simultaneous negotiation. An individual patent holder would prefer to negotiate early with the producer, and then to see remaining rights holders negotiate simultaneously. A firm that holds several patents would want to negotiate royalties on each one sequentially and then have simultaneous negotiation of payments to other rights holders. Keywords: Patents; Property; rights; Bargaining; Sequential; negotiation; Simultaneous; negotiation (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:72:y:2009:i:1:p:546-553 Access Statistics for this article Journal of Economic Behavior & Organization is currently edited by Houser, D. and Puzzello, D. More articles in Journal of Economic Behavior & Organization from Elsevier |
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