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

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

No 6351, CESifo Working Paper Series from CESifo Group Munich

Abstract: We study the 1956 consent decree against the Bell System to investigate whether patents held by a dominant firm are harmful for innovation and if so, whether compulsory licensing can provide an effective remedy. The consent decree settled an antitrust lawsuit that charged Bell with having foreclosed the market for telecommunications equipment. The decree forced Bell to license all its existing patents royalty-free. The compulsory licensing increased follow-on innovation building on Bell patents by 17%. This effect is driven mainly by young and small companies. Yet, innovation increased only outside the telecommunications equipment industry, suggesting that compulsory licensing without structural remedies is ineffective in ending market foreclosure.

Keywords: innovation; antitrust; intellectual property; compulsory licensing (search for similar items in EconPapers)
JEL-codes: O30 O33 O34 K21 L40 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com, nep-ind, nep-ino, nep-ipr, nep-law, nep-sbm and nep-tid
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3) Track citations by RSS feed

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