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Discussion Paper Details

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Title: Jostling for Advantage: Licensing and Entry into Patent Portfolio Races

Author(s): Ralph Siebert and Georg von Graevenitz

Publication Date: July 2006

Keyword(s): hold-up problem, innovation, licensing, patent race, patent thicket and research joint ventures

Programme Area(s): Industrial Organization

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.

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Bibliographic Reference

Siebert, R and von Graevenitz, G. 2006. 'Jostling for Advantage: Licensing and Entry into Patent Portfolio Races'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=5753