How Antitrust Enforcement Can Spur Innovation: Bell Labs and the 1956 Consent Decree

Martin Watzinger, Thomas A. Fackler, Markus Nagler and Monika Schnitzer ()

Munich Reprints in Economics from University of Munich, Department of Economics

Abstract: Is compulsory licensing an effective antitrust remedy to increase innovation? To answer this question, we analyze the 1956 consent decree that settled an antitrust lawsuit against Bell, a vertically integrated monopolist charged with foreclosing the telecommunications equipment market. Bell was forced to license all its existing patents royalty-free, including those not related to telecommunications. We identify the effect of the consent decree on follow-on innovations building on Bell patents by using exactly matched non-Bell patents as control group. We show that the consent decree led to a lasting increase in innovation but only in markets outside the telecommunications sector.

Date: 2020
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Citations: View citations in EconPapers (17)

Published in American Economic Journal-Economic Policy 4 12(2020): pp. 328-359

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Related works:
Journal Article: How Antitrust Enforcement Can Spur Innovation: Bell Labs and the 1956 Consent Decree (2020)
Working Paper: How Antitrust Enforcement Can Spur Innovation: Bell Labs and the 1956 Consent Decree (2017)
Working Paper: How Antitrust Enforcement Can Spur Innovation: Bell Labs and the 1956 Consent Decree (2017)
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