Adverse Effects of Patent Pooling on Product Development and Commercialization

Thomas Jeitschko and Nanyun Zhang

No 201205, EAG Discussions Papers from Department of Justice, Antitrust Division

Abstract: The conventional antitrust wisdom is that the formation of patent pools is welfare en- hancing when patents are complementary, since the pool avoids a double-marginalization problem associated with independent licensing. The focus of this paper is on (down- stream) product development and commercialization on the basis of perfectly comple- mentary patents. We consider development technologies that entail spillovers between rivals, and assume that nal demand products are imperfect substitutes. When pool formation facilitates information sharing and either increases spillovers in development or decreases the degree of product di erentiation, patent pools can adversely a ect welfare by reducing the incentives towards product development and product mar- ket competition|even with perfectly complementary patents. This modi es and even negates the conventional wisdom for some settings and suggests why patent pools are uncommon in science-based industries such as biotech and pharmaceuticals, despite there being frequent policy advocacy for them.

Keywords: Patent Pools; Research and Development; Innovation; BioTechnology; Electronics (search for similar items in EconPapers)
JEL-codes: D2 D4 L1 L2 L4 L6 (search for similar items in EconPapers)
Pages: 43 pages
Date: 2012-07
New Economics Papers: this item is included in nep-com, nep-ind, nep-ino, nep-ipr and nep-pr~
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Citations: View citations in EconPapers (4)

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Related works:
Journal Article: Adverse Effects of Patent Pooling on Product Development and Commercialization (2014)
Working Paper: Adverse effects of patent pooling on product development and commercialization (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:doj:eagpap:201205

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