Abstract

http://ssrn.com/abstract=1814587
 


 



The Effects of Non-Assertion of Patents Provisions: R&D Incentives in Vertical Relationships


Noriaki Matsushima


Osaka University - Institute of Social and Economic Research

Koki Arai


JFTC & CPRC (Japan Fair Trade Commission)

Ikuo Ishibashi


affiliation not provided to SSRN

Fumio Sensui


Kobe University

April 19, 2011

ISER Discussion Paper No. 807

Abstract:     
Using a simple downstream duopoly model with vertical relations and downstream R&D, we investigate the effect of non-assertion of patents (NAP) provisions. A monopoly upstream firm decides whether to employ NAP provisions. If it does so, it freely incorporates the R&D outcomes into its inputs. Incorporation improves the efficiency of the downstream firms' production. We have interpreted the introduction of NAP provisions as a source of technology spillover. Using the technologies of two downstream firms is optimal for the upstream firm if and only if the degree of technology spillover is small. In addition, if the ex ante cost difference between the downstream firms is significant, such technology spillovers erode both the profit of the efficient downstream firm and social welfare. We interpret our result in the context of an actual antitrust case related to this model.

Number of Pages in PDF File: 20

Keywords: vertical relations, investment, technology spillover, NAP provisions

JEL Classification: K43,L11

working papers series


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Date posted: April 20, 2011  

Suggested Citation

Matsushima, Noriaki and Arai, Koki and Ishibashi, Ikuo and Sensui, Fumio, The Effects of Non-Assertion of Patents Provisions: R&D Incentives in Vertical Relationships (April 19, 2011). ISER Discussion Paper No. 807. Available at SSRN: http://ssrn.com/abstract=1814587 or http://dx.doi.org/10.2139/ssrn.1814587

Contact Information

Noriaki Matsushima (Contact Author)
Osaka University - Institute of Social and Economic Research ( email )
6-1 Mihogaoka
Ibaraki, Osaka 567-0047
Japan
Koki Arai
JFTC & CPRC (Japan Fair Trade Commission) ( email )
Tokyo
Japan
Ikuo Ishibashi
affiliation not provided to SSRN ( email )
Fumio Sensui
Kobe University ( email )
2-1, Rokkodai-cho, Nada-ku
Kobe, 657-8501, 657-8501
Japan
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