|Schmidt, Klaus M. (2014): Complementary patents and market structure. In: Journal of Economics and Management Strategy, Vol. 23, No. 1: pp. 68-88|
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Many high technology goods are based on standards that require several essential patents owned by different IP holders. This gives rise to a complements and a double mark-up problem. We compare the welfare effects of two different business strategies dealing with these problems. Vertical integration of an IP holder and a downstream producer solves the double mark-up problem between these firms. Nevertheless, it may raise royalty rates and reduce output as compared to nonintegration. Horizontal integration of IP holders (patent pool, pass through) solves the complements problem but not the double mark-up problem. Vertical integration discourages entry and reduces innovation incentives, whereas a horizontally integrated firm always benefits from entry and innovation.
Economics > Chairs > Seminar for Economic Theory
|Subjects:||300 Social sciences > 330 Economics|
|Deposited On:||15. Apr 2014 08:53|
|Last Modified:||29. Apr 2016 09:17|
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Complementary Patents and Market Structure. (deposited 10. Jul 2012 13:08)
Complementary Patents and Market Structure. (deposited 10. Jul 2012 13:07)
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- Complementary Patents and Market Structure. (deposited 10. Jul 2012 13:07)