Abstract

http://ssrn.com/abstract=1961283
 
 

References (23)



 


 



Patent Royalties When Imitation Is Costly


John L. Turner


University of Georgia - C. Herman and Mary Virginia Terry College of Business - Department of Economics

Fernando Leiva Bertran


affiliation not provided to SSRN

November 17, 2011


Abstract:     
We identify welfare-maximizing patent royalties in a model of costly imitation, entry and imperfect competition. When the social planner may impose a compulsory license, optimal royalties either blockade entry, facilitating unregulated monopoly, or yield an aggregate-zero-profit duopoly. When duopoly is optimal, the optimal per-unit royalty pins the equilibrium price at the aggregate average cost and the optimal fixed royalty shifts surplus so the patentee and imitator break even. Interestingly, royalty payments with such royalties may be negative. Because of this, aggregate-zero-profit duopoly may be impossible to achieve if the planner must instead direct the courts to use such royalties.

Number of Pages in PDF File: 26

Keywords: patents, damages, royalties, invention, entry

JEL Classification: K2, O3

working papers series


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Date posted: November 18, 2011  

Suggested Citation

Turner, John L. and Bertran, Fernando Leiva, Patent Royalties When Imitation Is Costly (November 17, 2011). Available at SSRN: http://ssrn.com/abstract=1961283 or http://dx.doi.org/10.2139/ssrn.1961283

Contact Information

John L. Turner (Contact Author)
University of Georgia - C. Herman and Mary Virginia Terry College of Business - Department of Economics ( email )
Athens, GA 30602-6254
United States
Fernando Leiva Bertran
affiliation not provided to SSRN ( email )
Feedback to SSRN


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References:  23

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