Patent Auctions and Bidding Coalitions: Structuring the Sale of Club Goods

Mariagiovanna Baccara, John Asker and SangMok Lee

No 15703, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Auctioneers of patents are observed to allow joint bidding by coalitions of buyers. These auctions are distinguished from standard ones by the patents being non-rivalrous, but still excludable, in consumption--that is, they are club goods. This affects the way coalitional bidding impacts auction performance. We study the implications of coalitions of bidders on second-price (or equivalently, ascending-price) auctions. Although the formation of coalitions per se can benefit the seller, we show that stable coalition profiles tend to consist of excessively large coalitions, to the detriment of both auction revenue and social welfare. We show that limiting the permitted coalition size increases efficiency and confers benefits on the seller. Lastly, we compare the revenues generated by patent auctions and multi-license auctions, and we find that the latter are superior in a large class of environments.

Keywords: Intellectual property; Asymmetric auctions; Club goods; Patents (search for similar items in EconPapers)
JEL-codes: D44 D47 K1 L14 (search for similar items in EconPapers)
Date: 2021-01
New Economics Papers: this item is included in nep-com, nep-des, nep-gth, nep-ipr, nep-mic and nep-reg
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Related works:
Journal Article: Patent auctions and bidding coalitions: structuring the sale of club goods (2021)
Working Paper: Patent Auctions and Bidding Coalitions: Structuring the Sale of Club Goods (2021)
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