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Patent pool formation: Timing matters

Abstract : This paper addresses the problem of non-cooperative patent pool formation by owners of patents related to a standard. We develop a model in which competing manufacturers must license several patents to produce standard-compliant goods. Separate licensing creates a double-marginalization problem. Moreover manufacturers must sink a fixed cost to enter the product market, and thus face a hold-up problem if licensing takes place after their entry. In this setting, the formation of a pool fails when it takes place after entry. Instead, we show that allowing patent owners to commit ex ante on joining a pool is an effective way to trigger the emergence of a stable pool solving both the double-marginalization and hold-up problems. Therefore, patent owners should be encouraged to coordinate their licensing policies on a voluntary basis at early stages in the standard-setting process.
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Submitted on : Thursday, January 12, 2012 - 9:03:09 AM
Last modification on : Wednesday, November 17, 2021 - 12:31:44 PM



François Lévêque, Yann Ménière. Patent pool formation: Timing matters. Information Economics and Policy, Elsevier, 2011, 23 (3-4), pp.243-251. ⟨10.1016/j.infoecopol.2011.07.002⟩. ⟨hal-00659058⟩



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