To Merge or to License: Implications for Competition Policy

Faulí-Oller, Ramon and Sandonís, Joel
Authors registered in the RePEc Author Service: Joel Sandonis

No 2740, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: The optimal competition policy when licensing is an alternative to a merger, which has the intention of transferring a superior technology, and is derived in a differentiated goods duopoly, as in the cases of Cournot and Bertrand competition. We show that whenever both royalties and fixed fees are feasible, mergers should not be allowed, which fits the prescription of the US Horizontal Merger Guidelines. In contrast, when only one instrument is feasible, be it fixed fees or royalties, the possibility of licensing cannot be used as a definitive argument against mergers.

Keywords: Merger; Patent licensing; Competition policy (search for similar items in EconPapers)
JEL-codes: D43 D45 L41 (search for similar items in EconPapers)
Date: 2001-03
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Journal Article: To merge or to license: implications for competition policy (2003)
Working Paper: To Merge or to License: Implications for Competition Policy (2000)
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