Intellectual Property Clearinghouses and Investment in R&D

28 Pages Posted: 26 Feb 2008

See all articles by Reiko Aoki

Reiko Aoki

Japan Fair Trade Commssion

Aaron Schiff

Independent

Date Written: January 30, 2008

Abstract

We examine third-party clearinghouses that license innovations on behalf of inventors when downstream uses require licenses to multiple complementary innovations. We consider two simple clearinghouse royalty redistribution schemes, and two different innovation environments. We show that in most cases clearinghouses increase incentives to invest in R&D as they increase profits from licensing. However, expected profits of inventors who have the unique ability to develop a crucial component may be reduced. We also show that clearinghouses may increase or decrease expected welfare, and are more likely to be beneficial when R&D costs are relatively high, and/or the probability of success for inventors is relatively low.

Keywords: Intellectual property, licensing, clearinghouses, anticommons

JEL Classification: L24, O31, O34

Suggested Citation

Aoki, Reiko and Schiff, Aaron, Intellectual Property Clearinghouses and Investment in R&D (January 30, 2008). Available at SSRN: https://ssrn.com/abstract=1097489 or http://dx.doi.org/10.2139/ssrn.1097489

Reiko Aoki

Japan Fair Trade Commssion ( email )

1-1-1
Kasumigaseki
Chiyoda-ku, Tokyo 100-8987
Japan

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