Patent pool formation: Timing matters

François Lévêque () and Yann Ménière ()
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François Lévêque: CERNA i3 - Centre d'économie industrielle i3 - Mines Paris - PSL (École nationale supérieure des mines de Paris) - PSL - Université Paris Sciences et Lettres - I3 - Institut interdisciplinaire de l’innovation - CNRS - Centre National de la Recherche Scientifique

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Abstract: This paper addresses the problem of non-cooperative patent pool formation by owners of patents related to a standard. We develop a model in which competing manufacturers must license several patents to produce standard-compliant goods. Separate licensing creates a double-marginalization problem. Moreover manufacturers must sink a fixed cost to enter the product market, and thus face a hold-up problem if licensing takes place after their entry. In this setting, the formation of a pool fails when it takes place after entry. Instead, we show that allowing patent owners to commit ex ante on joining a pool is an effective way to trigger the emergence of a stable pool solving both the double-marginalization and hold-up problems. Therefore, patent owners should be encouraged to coordinate their licensing policies on a voluntary basis at early stages in the standard-setting process.

Keywords: Double-marginalization; Hold-out; Hold-up; Patent; Patent pool; Standard (search for similar items in EconPapers)
Date: 2011-12
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Citations: View citations in EconPapers (6)

Published in Information Economics and Policy, 2011, 23 (3-4), pp.243-251. ⟨10.1016/j.infoecopol.2011.07.002⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-00659058

DOI: 10.1016/j.infoecopol.2011.07.002

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