Patent pools and dynamic R&D incentives

Vianney Dequiedt () and Bruno Versaevel

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Abstract: Patent pools are cooperative agreements between two or more firms to license their related patents asa bundle. In a continuous-time model of multistage innovations, we characterize firms' incentives toperform R&D when they anticipate the possibility of starting a pool of complementary patents, whichcan be essential or nonessential. A coalition formation protocol leads the first innovators to start thepool immediately after they patent the essential technologies. The firms invest more than in the no-poolcase and increase the speed of R&D for essential technologies as the number of patents progresses to theanticipated endogenous pool size, to the benefit of consumers. There is overinvestment in R&D comparedto a joint profit-maximization benchmark. If firms anticipate the addition of nonessential patents to thepool they reduce their R&D efforts for the essential patents at each point in time, resulting in a slowertime to market for the pooled technologies.

Keywords: R&D races; Competition policy; Licensing; Innovation (search for similar items in EconPapers)
Date: 2013-10
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Citations: View citations in EconPapers (11)

Published in International Review of Law and Economics, 2013, 36, pp.59-69. ⟨10.1016/j.irle.2013.04.009⟩

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Related works:
Journal Article: Patent pools and dynamic R&D incentives (2013)
Working Paper: Patent Pools and Dynamic R&D Incentives (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-00833828

DOI: 10.1016/j.irle.2013.04.009

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