Thursday, December 6, 2012
Posted by D. Daniel Sokol
Andrea Fosfuri, Universidad Carlos III de Madrid - Department of Business Administration, Christian Helmers, London School of Economics & Political Science (LSE) - Centre for Economic Performance (CEP) and Catherine Roux, University of Saint Gallen ask Are Joint Patents Collusive? Evidence from the US and Europe.
ABSTRACT: We investigate whether patents that are jointly held by legally independent companies help sustain product-market collusion. We use a simple model of repeated interactions to show that joint patents can serve collusive purposes. Our model generates two testable predictions: when joint patents are held for collusive purposes, a) there is a positive relationship between the propensity to jointly own a patent and proximity in the product market; b) joint patents are associated with less licensing in the market for technology than individually owned patents, especially when firms are close product-market competitors. We construct a large, novel dataset that contains information on patents, research joint ventures, and licensing at the firm-level for the US and the EU to validate our theoretical predictions. We exploit differences in the legal regimes applicable to joint patents in the US and Europe to show that the data is consistent with our theoretical predictions.