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Complementary Patents and Market Structure

Klaus Schmidt ()

No 7005, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Many high technology goods are based on standards that require access to several patents that are owned by different IP holders. We investigate the royalties chosen by IP holders under different market structures. Vertical integration of an IP holder and a downstream producer solves the double mark-up problem between these firms. Nevertheless, it may raise royalty rates and reduce output as compared to non-integration. Horizontal integration of IP holders (or a patent pool) solves the complements problem but not the double mark-up problem. Vertical integration discourages entry and reduces innovation incentives, while horizontal integration always encourages entry and innovation.

Keywords: Complementary patents; Ip rights; Licensing; Patent pool; Standards; Vertical integration (search for similar items in EconPapers)
JEL-codes: K11 L15 L24 O31 O32 (search for similar items in EconPapers)
Date: 2008-10
New Economics Papers: this item is included in nep-com, nep-ino, nep-ipr, nep-pr~, nep-law, nep-mic and nep-tid
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Related works:
Journal Article: Complementary Patents and Market Structure (2014) Downloads
Working Paper: Complementary Patents and Market Structure (2009) Downloads
Working Paper: Complementary Patents and Market Structure (2008) Downloads
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