[Title:] Procedia – Economics and Finance. International Conference on Applied Economics, ICOAE 2015, 2-4 July 2015, Kazan, Russia [ISSN:] 2212-5671 [Pages:] 306-312
The objective of this paper is twofold. First, we study the patent hold-up problem in game-theoretic framework. We show that in subgame perfect equilibrium of the patent hold-up game the innovating manufacturer exerts reduced effort to develop the new product and the patent holder obtains the entire value of product innovation. Second, we show that royalty stacking, which is believed to magnify the patent hold-up, may cause less severe problems than the ones predicted by Lemley and Shapiro  when competition on the downstream product market is introduced.