Antitrust & Competition Policy Blog

Editor: D. Daniel Sokol
University of Florida
Levin College of Law

Thursday, October 1, 2015

AN EMPIRICAL EXAMINATION OF PATENT HOLDUP

Alexander Galetovic, Universidad de los Andes, Stephen Haber, Stanford University, Ross Levine, University of California, Berkeley provide AN EMPIRICAL EXAMINATION OF PATENT HOLDUP.

ABSTRACT: A large theoretical literature asserts that standard-essential patents (SEPs) allow their owners to “hold up” innovation by charging fees that exceed their incremental contribution to a final product. We evaluate two central, interrelated predictions of this SEP holdup hypothesis: (1) SEP-reliant industries should experience more stagnant quality-adjusted prices than non-SEP-reliant industries; and (2) court decisions that reduce the excessive power of SEP holders should accelerate innovation in SEP-reliant industries. We find no empirical support for either prediction. Indeed, SEP-reliant industries have the fastest quality-adjusted price declines in the U.S. economy.

https://lawprofessors.typepad.com/antitrustprof_blog/2015/10/an-empirical-examination-of-patent-holdup.html

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