Jostling for advantage or not: Choosing between patent portfolio races and ex ante licensing

Ralph Siebert and Georg von Graevenitz

Journal of Economic Behavior & Organization, 2010, vol. 73, issue 2, 225-245

Abstract: Complex high technology industries are increasingly affected by patent thickets in which firms' patents mutually block the use of important technologies. Firms facing patent thickets patent intensively to acquire bargaining chips and use licensing to ensure freedom to operate. Such licensing allows rivals to either avoid or resolve hold-up from blocking patents. R&D incentives depend on whether licensing takes place ex ante or ex post. We model the choice between ex ante licensing and entry into patent portfolio races leading to ex post licensing. It is shown that higher degrees of blocking lead firms to license ex post, while stronger product market competition leads firms to license ex ante. Empirical results support these theoretical predictions.

Keywords: Hold-up; problem; Licensing; Innovation; Patent; race; Patent; thicket; Research; joint; ventures (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (13)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:73:y:2010:i:2:p:225-245

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