Price controls versus compulsory licensing: effects on patent-holders and consumers

Eric Bond and Kamal Saggi ()

No 17-00013, Vanderbilt University Department of Economics Working Papers from Vanderbilt University Department of Economics

Abstract: We extend the model of Bond and Saggi (2014) in which a patent-holder chooses between direct entry and the voluntary licensing of its technology to a local firm in a developing country. We compare two scenarios: one where the country imposes a price control on the patent-holder and another where it issues a compulsory license to the local firm if the patent-holder decides to neither enter nor license its technology voluntarily. A price control makes entry less attractive to the patent-holder relative to voluntary licensing whereas the threat of compulsory licensing has the opposite effect. While a price control always makes the patent-holder worse off, the option of compulsory licensing can sometimes be to its advantage.

Keywords: Patented Goods; Compulsory Licensing; Voluntary Licensing; Price Controls; Quality; Welfare (search for similar items in EconPapers)
JEL-codes: F1 (search for similar items in EconPapers)
Date: 2017-10-21
New Economics Papers: this item is included in nep-com, nep-ino and nep-ipr
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Citations: View citations in EconPapers (1)

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