Endogenous licensing in cumulative innovation

Abstract

This paper analyzes the endogeneity of licensing arrangements in cost-reducing cumulative innovation. There exists the following results. First, for the first-generation patentee, ex post licensing matters for rent extraction while ex ante licensing matters for efficiency. Second, if the second-generation innovator does not exit, then the firms’ profits as well as social welfare are all irrelevant to whether ex ante licensing is allowed. Third, costly litigation can occur on the equilibrium path and its occurrence is also irrelevant to ex ante licensing. Interestingly, the conditional probability of the first-generation patentee winning litigation first decreases and then increases in patent breadth. Fourth, optimal patent breadth depends on the tradeoff between litigation costs and antitrust effect.

摘要

累积创新环境下许可证形式的内生决定机制如下: 第一, 对先期创新者而言, 事前许可证的重要性在于维护效率。 第二, 诉讼可以出现在博弈的均衡路径上, 诉讼行为和是否存在事前许可证无关。 第三, 如果存在退出问题, 则事前许可证对社会福利至关重要; 专利保护宽度同时影响市场总利润和利润分配。 此时, 若仅有事后许可证, 先期创新者的利润可能随专利保护宽度的增加而下降。 第四, 给定存在事前许可证, 则依赖于诉讼的成本和反断效应。