Patent pools and dynamic R&D incentives

Vianney Dequiedt (1) , Bruno Versaevel (2, 3)

1 CERDI - Centre d'Études et de Recherches sur le Développement International
2 GATE - Groupe d'analyse et de théorie économique
3 EM - EMLyon Business School

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.

Mots clés: R&D races; Competition policy; Licensing; Innovation

Domaines: Economies et finances

Vianney Dequiedt, Bruno Versaevel. Patent pools and dynamic R&D incentives. International Review of Law and Economics, 2013, 36, pp.59-69. ⟨10.1016/j.irle.2013.04.009⟩. ⟨halshs-00833828⟩