Cross-Licensing and Competition

50 Pages Posted: 27 Nov 2015

See all articles by Doh-Shin Jeon

Doh-Shin Jeon

Toulouse School of Economics (TSE); Centre for Economic Policy Research (CEPR)

Yassine Lefouili

University of Toulouse 1 - Toulouse School of Economics (TSE)

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Date Written: November 2015

Abstract

We study bilateral cross-licensing agreements among N (>2) competing firms. We find that the industry-profit-maximizing royalty can be sustained as the outcome of bilaterally efficient agreements. This holds regardless of whether agreements are public or private and whether firms compete in quantities or prices. We extend this monopolization result to a general class of two-stage games in which firms bilaterally agree in the first stage to make each other payments that depend on their second-stage non-cooperative actions. Policy implications regarding the antitrust treatment of cross-licensing agreements are derived.

Keywords: antitrust and intellectual property, collusion, cross-licensing, royalties

JEL Classification: D14, F13, L24, L41, O34

Suggested Citation

Jeon, Doh-Shin and Lefouili, Yassine, Cross-Licensing and Competition (November 2015). CEPR Discussion Paper No. DP10941, Available at SSRN: https://ssrn.com/abstract=2696132

Doh-Shin Jeon (Contact Author)

Toulouse School of Economics (TSE) ( email )

Place Anatole-France
Toulouse Cedex, F-31042
France

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Yassine Lefouili

University of Toulouse 1 - Toulouse School of Economics (TSE)

1 Esplanade de l’Université
Toulouse, F-31000
France

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