Licensing Complementary Patents and Vertical Integration
35 Pages Posted: 1 Feb 2007
There are 2 versions of this paper
Licensing Complementary Patents and Vertical Integration
Date Written: December 2006
Abstract
In this paper we investigate the pricing incentives of IP holders and compare the equilibrium royalty rates charged by vertically integrated IP holders with those of non-integrated IP holders. We show that under many circumstances non-integrated companies are likely to charge lower royalties than their vertically integrated counterparts. The results of this paper are of special relevance for the analysis of competition in CDMA and WCDMA technology licensing, where some IP holders are not vertically integrated into handset and infrastructure manufacturing, while others are.
Keywords: Complementary patents, licensing, IP rights, vertical integration
JEL Classification: D43, L15, L41
Suggested Citation: Suggested Citation