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Licensing in the Patent Thicket - Timing and Benefits

Author

Listed:
  • Siebert, Ralph Bernd
  • Graevenitz, Georg von
Abstract
Licensing can be a solution for hold-up in patent thickets. In this paper we study whether licensing is an effective solution for hold-up. To do this we distinguish between ex ante and ex post licensing. A theoretical model shows that firms’ expectations of blocking in a patent thicket determine whether they license ex ante while ex post licensing arises if expected blocking was low but realized blocking turns out to be high. It can also be shown that ex ante licensing will allow firms to reduce their patenting efforts. A sample selection model of licensing is derived from the theoretical model. Applying this to data from the semiconductor industry we show that licensing does help firms to resolve blocking. However, the probability of observing licensing decreases as fragmentation of property rights increases and arises mainly between large firms with similar market shares. Licensing experience is also an important determinant of licensing. As expected ex ante licensing allows firms to reduce the level of patenting.

Suggested Citation

  • Siebert, Ralph Bernd & Graevenitz, Georg von, 2010. "Licensing in the Patent Thicket - Timing and Benefits," MPRA Paper 24007, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:24007
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    File URL: https://mpra.ub.uni-muenchen.de/24007/1/MPRA_paper_24007.pdf
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    References listed on IDEAS

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    Cited by:

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    2. Fischer, Timo & Henkel, Joachim, 2012. "Patent trolls on markets for technology – An empirical analysis of NPEs’ patent acquisitions," Research Policy, Elsevier, vol. 41(9), pages 1519-1533.
    3. Schwiebacher, Franz, 2013. "Does fragmented or heterogeneous IP ownership stifle investments in innovation?," ZEW Discussion Papers 13-096, ZEW - Leibniz Centre for European Economic Research.

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    More about this item

    Keywords

    Hold-Up Problem; Licensing; Innovation; Patent Race; Patent Thicket;
    All these keywords.

    JEL classification:

    • L0 - Industrial Organization - - General
    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital

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