Jostling for Advantage: Licensing and Entry into Patent Portfolio Races

29 Pages Posted: 17 Aug 2006

See all articles by Ralph Siebert

Ralph Siebert

Purdue University; CESifo

Georg von Graevenitz

Queen Mary, School of Business and Management; Center for Competition Policy; University of Glasgow - CREATe, RCUK Centre for Copyright and New Business Models in the Creative Economy

Date Written: July 2006

Abstract

Licensing in a patent thicket allows firms to either avoid or resolve hold-up. Firms' R&D incentives depend on whether they license ex ante or ex post. We develop a model of a patent portfolio race, which allows for endogenous R&D efforts, to study firms' choice between ex ante and ex post licensing. The model shows that firms' relationships in product markets and technology space jointly determine the type of licensing contract chosen. In particular, product market competitors are more likely to avoid patent portfolio races, since the threat of hold-up increases. On the other hand, more valuable technologies are more likely to give rise to patent portfolio races. We also discuss the welfare implications of these results.

Keywords: Hold-up problem, licensing, innovation, patent race, patent thicket, research joint ventures

JEL Classification: L13, L49, L63

Suggested Citation

Siebert, Ralph and von Graevenitz, Georg, Jostling for Advantage: Licensing and Entry into Patent Portfolio Races (July 2006). CEPR Discussion Paper No. 5753, Available at SSRN: https://ssrn.com/abstract=924938

Ralph Siebert (Contact Author)

Purdue University ( email )

610 Purdue Mall
West Lafayette, IN 47907
United States

CESifo ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

Georg Von Graevenitz

Queen Mary, School of Business and Management ( email )

Mile End
London, E1 4NS
United Kingdom

Center for Competition Policy ( email )

UEA
Norwich Research Park
Norwich, Norfolk NR47TJ
United Kingdom

University of Glasgow - CREATe, RCUK Centre for Copyright and New Business Models in the Creative Economy ( email )

10 The Square, Glasgow University
Glasgow, G12 8QQ
United Kingdom

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