Optimal Bid Disclosure in Patent License Auctions Under Alternative Modes of Competition
27 Pages Posted: 20 Mar 2017 Last revised: 29 Oct 2017
Date Written: March 20, 2016
The literature on patent license auctions in oligopoly assumed that the auctioneer reveals the winning bid and stressed that this gives firms an incentive to bid high in order to signal an aggressive output strategy in a downstream Cournot market game, and conversely bid low to signal acquiescent pricing in a Bertrand market game. The present paper examines the information revealed by publishing the winning or the losing or no bid, assuming an oligopoly with differentiated goods. We rank disclosure rules and find that it is not optimal for the innovator to disclose the winning bid, regardless of the mode of competition.
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