Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/104489 
Year of Publication: 
2008
Series/Report no.: 
Discussion Paper No. 2008-01
Publisher: 
Ludwig-Maximilians-Universität München, Fakultät für Betriebswirtschaft, München
Abstract: 
In a patent thicket licensing provides a mechanism to either avoid or resolve hold up. We study the choice between ex ante licensing to avoid hold up and ex post licensing to resolve it. Firms’ choice of licensing contract is studied in the context of a patent portfolio race. We show that high expected blocking leads to ex ante licensing while ex post licensing arises if expected blocking is low but realized blocking is high. Also, ex ante licensing reduces firms’ R&D incentives. A sample selection model of licensing is derived from the theoretical model. In this framework theoretical predictions on effects of blocking are tested with data from the semiconductor industry. We show that licensing helps firms to resolve blocking. However, licensing is not a cure all: it decreases as fragmentation of property rights increases and arises mainly between large firms with similar market shares. Using a treatment effects model we also confirm the prediction that ex ante licensing reduces the level of R&D investment.
Subjects: 
Hold-Up Problem
Licensing
Innovation
Patent Race
Patent Thicket.
JEL: 
L13
L49
L63
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.