Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/179418
Authors: 
Capuano, Carlo
Grassi, Iacopo
Year of Publication: 
2018
Series/Report no.: 
EERI Research Paper Series 03/2018
Abstract: 
In recent years, the increasing awarding of patents has captured the attention of scholars operating in different fields. Economic literature has studied the causes of this proliferation; we propose an entry game focusing on one of the consequences, showing how an incumbent may create a patent portfolio in order to control market entry and to collude. The incumbent fixes the level of patent protection and the threat of denunciation reduces the entrant's expected profits; moreover, if the entrant deviates from collusion, the incumbent can strengthen punishment suing the competitor for patent infringement, reducing her incentive to deviate. Our analysis suggests that antitrust authorities should pay attention to the level of patent protection implemented by the incumbent and note whether the holder of a patent reacts to entry by either suing or not suing the competitor. In the model, we use completely general functional forms in analyzing the is- sues, and this allows us to obtain general results not depending on the assumptions about the kind of oligopolistic competition.
Subjects: 
patents
patent portfolio
litigation
collusion
foreclosing
entry game
JEL: 
D43
K21
L13
Document Type: 
Working Paper

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