Thursday, May 3, 2012
Posted by D. Daniel Sokol
Richard Gilbert (Berkeley) has an interesting new paper Deal or No Deal? Licensing Negotiations in Standard-Setting Organizations.
ABSTRACT: Technical standards benefit consumers and producers by facilitating productadoption, promoting compatible solutions, and helping to create anecosystem of products and services in which competition can thrive. However,standards also may create opportunities for the exercise of market power. Owners of patents with claims that are essential to a standard may hold up firms or consumers that are locked-in to a standard by charging high royalties for the use of products that comply with the standard. This licensor (or seller) market power arises ex post, i.e., after firms and consumers have made investments that are specific to the standard.