Protecting Consumers Through Patent Protection: The Implications of Merger

19 Pages Posted: 5 Dec 2014

See all articles by Shantanu Banerjee

Shantanu Banerjee

Lancaster University - Management School

Arijit Mukherjee

University of Nottingham - School of Economics

Date Written: September 1, 2014

Abstract

We challenge the common wisdom that patent protection (compared to no or weak patent protection) makes the consumers worse off by reducing product-market competition unless it increases innovation significantly. We show that the absence of patent protection may encourage horizontal merger and affect the consumers adversely by increasing product-market concentration compared to the situation with patent protection. Hence, even if we ignore the innovation inducing role of patent protection, the positive impact of patent protection on the consumers through its effect on the product-market competition provides a new rationale for patent protection, which has been overlooked in the literature.

Keywords: Patent protection; Merger; Consumer surplus

JEL Classification: D43, F21, F23, L13, O34.

Suggested Citation

Banerjee, Shantanu and Mukherjee, Arijit, Protecting Consumers Through Patent Protection: The Implications of Merger (September 1, 2014). Available at SSRN: https://ssrn.com/abstract=2533545 or http://dx.doi.org/10.2139/ssrn.2533545

Shantanu Banerjee (Contact Author)

Lancaster University - Management School ( email )

Lancaster, Lancashire LA1 4YX
United Kingdom

Arijit Mukherjee

University of Nottingham - School of Economics ( email )

University Park
Nottingham, NG7 2RD
United Kingdom
+44 115 9514733 (Phone)
+44 115 9514159 (Fax)

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