Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/92873
Authors: 
Matsushima, Noriaki
Arai, Koki
Ishibashi, Ikuo
Sensui, Fumio
Year of Publication: 
2011
Series/Report no.: 
ISER Discussion Paper, Institute of Social and Economic Research, Osaka University 807
Abstract: 
Using a simple downstream duopoly model with vertical relations and downstream R&D, we investigate the effect of non-assertion of patents (NAP) provisions. A monopoly upstream firm decides whether to employ NAP provisions. If it does so, it freely incorporates the R&D outcomes into its inputs. Incorporation improves the efficiency of the downstream firms' production. We have interpreted the introduction of NAP provisions as a source of technology spillover. Using the technologies of two downstream firms is optimal for the upstream firm if and only if the degree of technology spillover is small. In addition, if the ex ante cost difference between the downstream firms is significant, such technology spillovers erode both the profit of the efficient downstream firm and social welfare. We interpret our result in the context of an actual antitrust case related to this model.
Subjects: 
vertical relations
investment
technology spillover
NAP provisions
JEL: 
K43
L11
Document Type: 
Working Paper

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