Decentralized licensing of complementary patents: Comparing the royalty, fixed-fee and two-part tariff regimes

Yann Ménière (1) , Sarah Parlane (2)

1 CERNA i3 - Centre d'économie industrielle i3
2 UCD School of Economics

This paper explores the decentralized licensing of complementary patents reading on a technology standard. We develop a model in which manufacturers must buy licenses from different patent owners in order to enter the market for differentiated standard-compliant products. We consider three different types of licensing, namely, the fixed-fee, per-unit royalty and two-part tariff regimes, and compare their performances in terms of licensing revenue, price, product variety and welfare. We show that each regime entails different types of coordination failures. We establish that each of them may maximize the licensing revenue depending on the number of licensors, number of potential entrants and product differentiation.

Mots clés: Standard; Licence; Patent; Royalty; License; Complementary innovations

Domaines: Economies et finances

Yann Ménière, Sarah Parlane. Decentralized licensing of complementary patents: Comparing the royalty, fixed-fee and two-part tariff regimes. Information Economics and Policy, 2010, 22 (2), pp.178-191. ⟨10.1016/j.infoecopol.2009.10.003⟩. ⟨hal-00460754⟩