Licensing Complementary Patents and Vertical Integration

35 Pages Posted: 1 Feb 2007

See all articles by Klaus M. Schmidt

Klaus M. Schmidt

Ludwig Maximilian University of Munich (LMU) - Faculty of Economics; CESifo (Center for Economic Studies and Ifo Institute); Centre for Economic Policy Research (CEPR)

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Date Written: December 2006

Abstract

In this paper we investigate the pricing incentives of IP holders and compare the equilibrium royalty rates charged by vertically integrated IP holders with those of non-integrated IP holders. We show that under many circumstances non-integrated companies are likely to charge lower royalties than their vertically integrated counterparts. The results of this paper are of special relevance for the analysis of competition in CDMA and WCDMA technology licensing, where some IP holders are not vertically integrated into handset and infrastructure manufacturing, while others are.

Keywords: Complementary patents, licensing, IP rights, vertical integration

JEL Classification: D43, L15, L41

Suggested Citation

Schmidt, Klaus M., Licensing Complementary Patents and Vertical Integration (December 2006). CEPR Discussion Paper No. 5987, Available at SSRN: https://ssrn.com/abstract=960829

Klaus M. Schmidt (Contact Author)

Ludwig Maximilian University of Munich (LMU) - Faculty of Economics ( email )

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CESifo (Center for Economic Studies and Ifo Institute)

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Germany

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Centre for Economic Policy Research (CEPR)

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United Kingdom

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