Reference

Doh-Shin Jeon, and Yassine Lefouili, Cross-Licensing and Competition, IDEI Working Paper, n. 850, May 19, 2015.

Abstract

We study bilateral cross-licensing agreements among N (> 2) competing firms. We find that the fully cooperative royalty, i.e., the one that allows them to achieve the monopoly profit, can be sustained as the outcome of bilaterally efficient agreements, regardless of whether the agreements are public or private and whether firms compete in quantities or prices. We extend this monopolization result to a general class of two-stage games in which firms bilaterally agree in the first stage to make each other payments that depend on their second-stage non-cooperative actions. Policy implications regarding the antitrust treatment of cross-licensing agreements are derived.

Keywords

Cross-Licensing; Royalties; Collusion; Antitrust and Intellectual Property;

JEL codes

  • D43: Oligopoly and Other Forms of Market Imperfection
  • L13: Oligopoly and Other Imperfect Markets
  • L24: Contracting Out • Joint Ventures • Technology Licensing
  • L41: Monopolization • Horizontal Anticompetitive Practices
  • O34: Intellectual Property and Intellectual Capital

Research partnership

Toulouse Network for Information Technology (TNIT)