The Problem of Oligopsonistic Collusion in a Weak Patent Regime

Abstract

The collective behavior of a group of technology industry oligopolists to fix input prices of patented technology so as to increase profits and constrain competition is analyzed in light of antitrust cases. The antitrust laws and the patent system are seen as complementary, with antitrust laws constraining dominant firms and patents enabling market entry. A set of remedies for oligopsonistic collusion are reviewed.

Index

Introduction: Two Complementary Logics to Promote Competition:

Antitrust Law and Patent Law 2

I) Antitrust Law at the Crossroads of Patent Law 6 A) Anti-Competitive Behaviors Across the Industry Cycle 12 B) Macro-monopoly and Micro-monopolies 16 II) Economic Analysis of Anticompetitive Behaviors 23 A) Suppression of Competition with Vertical Price Constraints 27 B) Oligopolist Price Fixing and Demand Elasticities 29 C) Deadweight Loss from Inefficient Competition 33

III) Oligopsonistic Collusion to Suppress Entrants 34 A) Oligopsonist Refusal to Deal as Antitrust Abuse 40 B) Collective Behavior of Oligopsonists to Fix Input Prices by Weakening Patent Rights 48 C) Effects of Oligopsonistic Collusion 54 D) Anticompetitive Behaviors of Foreign Oligopolists 56

IV) Antitrust Remedies for Oligopsonistic Collusion 61 A) Measuring Antitrust Injury of Oligopsonistic Collusion 62 B) Assessing Damages for Anticompetitive Oligopsonistic Behaviors 68 V) Incumbent Compulsory Licensing: Essential Facilities after Trinko 70 A) The Failure of FTC Action on Xerox 71 B) Essential Facilities of Technology Monopolist Directed to Market Entrants: Regulatory Solutions and the Duty to Deal 75