The co-existence of patent-pools

24 Pages Posted: 26 Mar 2021

See all articles by Stefan Lobin

Stefan Lobin

Goethe University Institute of Economics

Uwe Walz

Goethe University Frankfurt - Institute of Economics; Center For Financial Studies (CFS); Leibniz Institute for Financial Research SAFE

Date Written: March 25, 2021

Abstract

Many industries, in particular high-tech industries, have experienced the (re-)emergence of patent pools that potentially co-exist with each other. In this paper, we provide a theoretical framework which allows us to understand the main determinants of co-existing patent pools. In this framework, we discuss the decision to create competing patent pools against the background of the trade-off between decreasing returns to patent pool size and a profit-reducing competition effect. We show that co-existence which allows to serve vertically segmented markets is more likely to be observed with a larger patent universe, with substantial technological dispersion as well as stronger concave patent value functions. Furthermore, we show that if the co-existence of pools emerges in equilibrium, then welfare always dominates a common pool and sometimes even in the absence of pools altogether.

Keywords: patents, pools, co-existence, welfare, vertical segmentation

JEL Classification: L12, L13, D61

Suggested Citation

Lobin, Stefan and Walz, Uwe, The co-existence of patent-pools (March 25, 2021). Available at SSRN: https://ssrn.com/abstract=3812530 or http://dx.doi.org/10.2139/ssrn.3812530

Stefan Lobin (Contact Author)

Goethe University Institute of Economics ( email )

Postfach 81
D-60054 Frankfurt
Germany

Uwe Walz

Goethe University Frankfurt - Institute of Economics ( email )

Postfach 81
D-60054 Frankfurt
Germany

Center For Financial Studies (CFS) ( email )

Gr├╝neburgplatz 1
Frankfurt am Main, 60323
Germany

Leibniz Institute for Financial Research SAFE ( email )

(http://www.safe-frankfurt.de)
Theodor-W.-Adorno-Platz 3
Frankfurt am Main, 60323
Germany

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