Jostling for Advantage or Not: Choosing Between Patent Portfolio Races and Ex Ante Licensing

Ralph Siebert, Georg Von Graevenitz

Research output: Contribution to journalArticlepeer-review

18 Citations (Scopus)
6 Downloads (Pure)

Abstract

Complex high technology industries are increasingly affected by patent thickets in which firms’ patents mutually block the use of important technologies. Firms facing patent thickets patent intensively to acquire bargaining chips and use licensing to ensure freedom to operate. Such licensing allows rivals to either avoid or resolve hold-up from blocking patents. R&D incentives depend on whether licensing takes place ex ante or ex post. We model the choice between ex ante licensing and entry into patent portfolio races leading to ex post licensing. It is shown that higher degrees of blocking lead firms to license ex post, while stronger product market competition leads firms to license ex ante. Empirical results support these theoretical predictions.
Original languageEnglish
Pages (from-to)225-245
Number of pages21
JournalJournal of Economic Behavior & Organization
Volume73
Issue number2
DOIs
Publication statusPublished - Feb 2010

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