Online Appendix for 'An Economic Model of Patent Exhaustion'

8 Pages Posted: 17 Jul 2020

See all articles by Olena Ivus

Olena Ivus

Smith School of Business

Edwin Lai

Hong Kong University of Science & Technology (HKUST)

Ted M. Sichelman

University of San Diego School of Law

Date Written: June 23, 2020

Abstract

In this online appendix, we discuss extensions to our model of patent exhaustion. Section A.1 examines how the patent owner's incentive to invest in product quality (a proxy for the overall ex ante innovation) in a regime of presumptive exhaustion compares to a regime of absolute exhaustion. In Section A.2, we allow for heterogeneous intermediaries that purchase and license on behalf of the buyers, and also assume that the patent owner incurs a transaction cost when licensing to the manufacturer. Section A.3 considers information asymmetry in assessing the buyer's demand, and Section A.4 allows for unpatented imperfect substitutes for the patented component. In Section A.5, we assume that there is a second-hand market in which current buyers can buy used goods (with depreciated quality), which have been previously purchased by other buyers from the patent owner at a discounted price. Section A.6 considers multi-component products.

Keywords: Intellectual Property, Patent Exhaustion, First Sale Doctrine, Patent Licensing

JEL Classification: F10, O34, F100, O310

Suggested Citation

Ivus, Olena and Lai, Edwin and Sichelman, Ted M., Online Appendix for 'An Economic Model of Patent Exhaustion' (June 23, 2020). Available at SSRN: https://ssrn.com/abstract=3634038 or http://dx.doi.org/10.2139/ssrn.3634038

Olena Ivus

Smith School of Business ( email )

Smith School of Business - Queen's University
143 Union Street
Kingston, Ontario K7L 3N6
Canada

Edwin Lai

Hong Kong University of Science & Technology (HKUST)

Clearwater Bay
Kowloon, 999999
Hong Kong

Ted M. Sichelman (Contact Author)

University of San Diego School of Law ( email )

5998 Alcala Park
San Diego, CA 92110-2492
United States
(619) 260-7512 (Phone)
(619) 260-2748 (Fax)

HOME PAGE: http://https://www.sandiego.edu/law/faculty/profiles/bio.php?ID=795

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