An Empirical Examination of Patent Hold-Up

45 Pages Posted: 2 Apr 2015

See all articles by Alexander Galetovic

Alexander Galetovic

Universidad Adolfo Ibáñez; Stanford University - The Hoover Institution on War, Revolution and Peace; University of Padua - CRIEP

Stephen Haber

Stanford University - Hoover Institution and Political Science

Ross Levine

University of California, Berkeley - Haas School of Business; National Bureau of Economic Research (NBER)

Multiple version iconThere are 2 versions of this paper

Date Written: March 31, 2015

Abstract

A large literature asserts that standard essential patents (SEPs) allow their owners to “hold up” innovation by charging fees that exceed their incremental contribution to a final product. We evaluate two central, interrelated predictions of this SEP hold-up hypothesis: (1) SEP-reliant industries should experience more stagnant quality-adjusted prices than similar non-SEP-reliant industries; and (2) court decisions that reduce the excessive power of SEP holders should accelerate innovation in SEP-reliant industries. We find no empirical support for either prediction. Indeed, SEP-reliant industries have the fastest quality-adjusted price declines in the U.S. economy.

Keywords: Innovation, Patents, Standard Essential Patents, Trolls, Non-practicing entity

JEL Classification: K11, O31, O34, O38

Suggested Citation

Galetovic, Alexander and Haber, Stephen H. and Levine, Ross Eric, An Empirical Examination of Patent Hold-Up (March 31, 2015). Available at SSRN: https://ssrn.com/abstract=2588169 or http://dx.doi.org/10.2139/ssrn.2588169

Alexander Galetovic

Universidad Adolfo Ibáñez ( email )

Peñalolén
Santiago
Chile

Stanford University - The Hoover Institution on War, Revolution and Peace ( email )

Stanford, CA 94305-6010
United States

University of Padua - CRIEP ( email )

Padua
Italy

Stephen H. Haber (Contact Author)

Stanford University - Hoover Institution and Political Science ( email )

Stanford, CA 94305
United States

Ross Eric Levine

University of California, Berkeley - Haas School of Business ( email )

545 Student Services Building, #1900
2220 Piedmont Avenue
Berkeley, CA 94720
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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