Patent pools and dynamic R&D incentives

Abstract : Patent pools are cooperative agreements between two or more firms to license their related patents asa bundle. In a continuous-time model of multistage innovations, we characterize firms' incentives toperform R&D when they anticipate the possibility of starting a pool of complementary patents, whichcan be essential or nonessential. A coalition formation protocol leads the first innovators to start thepool immediately after they patent the essential technologies. The firms invest more than in the no-poolcase and increase the speed of R&D for essential technologies as the number of patents progresses to theanticipated endogenous pool size, to the benefit of consumers. There is overinvestment in R&D comparedto a joint profit-maximization benchmark. If firms anticipate the addition of nonessential patents to thepool they reduce their R&D efforts for the essential patents at each point in time, resulting in a slowertime to market for the pooled technologies.
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Submitted on : Thursday, June 13, 2013 - 3:42:04 PM
Last modification on : Wednesday, May 22, 2019 - 1:23:41 AM

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Vianney Dequiedt, Bruno Versaevel. Patent pools and dynamic R&D incentives. International Review of Law and Economics, Elsevier, 2013, 36, pp.59-69. ⟨halshs-00833828⟩

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