Intellectual Property, Antitrust and Strategic Behavior

35 Pages Posted: 7 Jun 2002  

Dennis W. Carlton

University of Chicago - Booth School of Business; National Bureau of Economic Research (NBER)

Robert H. Gertner

University of Chicago - Finance; National Bureau of Economic Research (NBER)

Date Written: June 2002

Abstract

Economic growth depends in large part on technological change. Laws governing intellectual property rights protect inventors from competition in order to create incentives for them to innovate. Antitrust laws constrain how a monopolist can act in order to maintain its monopoly in an attempt to foster competition. There is a fundamental tension between these two different types of laws. Attempts to adapt static antitrust analysis to a setting of dynamic R&D competition through the use of 'innovation markets' are likely to lead to error. Applying standard antitrust doctrines such as tying and exclusivity to R&D settings is likely to be complicated. Only detailed study of the industry of concern has the possibility of uncovering reliable relationships between innovation and industry behavior. One important form of competition, especially in certain network industries, is between open and closed systems. We have presented an example to illustrate how there is a tendency for systems to close even though an open system is socially more desirable. Rather than trying to use the antitrust laws to attack the maintenance of closed systems, an alternative approach would be to use intellectual property laws and regulations to promote open systems and the standard setting organizations that they require. Recognition that optimal policy toward R&D requires coordination between the antitrust and intellectual property laws is needed.

Suggested Citation

Carlton , Dennis W. and Gertner, Robert H., Intellectual Property, Antitrust and Strategic Behavior (June 2002). NBER Working Paper No. w8976. Available at SSRN: https://ssrn.com/abstract=315326

Dennis W. Carlton (Contact Author)

University of Chicago - Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States
312-322-0215 (Phone)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Robert H. Gertner

University of Chicago - Finance ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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