Patent Auctions and Bidding Coalitions: Structuring the Sale of Club Goods

John Asker, Mariagiovanna Baccara and SangMok Lee

No 28602, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Auctioneers of patents are observed to allow joint bidding by coalitions of buyers. These auctions are distinguished by the good for sale being non-rivalrous, but still excludable, in consumption{that is, they auctions of club goods. This affects how coalitional bidding impacts auction performance. We study the implications of coalitions of bidders on second-price (or equivalently, ascending-price) auctions. Although the formation of coalitions can benefit the seller, we show that stable coalition profiles tend to consist of excessively large coalitions, to the detriment of both auction revenue and social welfare. Limiting the permitted coalition size increases efficiency and confers benefits on the seller. Lastly, we compare the revenues generated by patent auctions and multi-license auctions, and we find that the latter are superior in a large class of environments.

JEL-codes: D44 D47 K21 L14 L24 L4 O34 (search for similar items in EconPapers)
Date: 2021-03
New Economics Papers: this item is included in nep-com, nep-des, nep-gth, nep-ipr, nep-mic and nep-reg
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Published as John Asker & Mariagiovanna Baccara & SangMok Lee, 2021. "Patent auctions and bidding coalitions: structuring the sale of club goods," The RAND Journal of Economics, vol 52(3), pages 662-690.

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Journal Article: Patent auctions and bidding coalitions: structuring the sale of club goods (2021)
Working Paper: Patent Auctions and Bidding Coalitions: Structuring the Sale of Club Goods (2021)
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