Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/155593
Authors: 
Watzinger, Martin
Fackler, Thomas A.
Nagler, Markus
Schnitzer, Monika
Year of Publication: 
2017
Series/Report no.: 
CESifo Working Paper 6351
Abstract: 
We study the 1956 consent decree against the Bell System to investigate whether patents held by a dominant firm are harmful for innovation and if so, whether compulsory licensing can provide an effective remedy. The consent decree settled an antitrust lawsuit that charged Bell with having foreclosed the market for telecommunications equipment. The decree forced Bell to license all its existing patents royalty-free. The compulsory licensing increased follow-on innovation building on Bell patents by 17%. This effect is driven mainly by young and small companies. Yet, innovation increased only outside the telecommunications equipment industry, suggesting that compulsory licensing without structural remedies is ineffective in ending market foreclosure.
Subjects: 
innovation
antitrust
intellectual property
compulsory licensing
JEL: 
O30
O33
O34
K21
L40
Document Type: 
Working Paper

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