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Cross‐licensing and competition
Author(s) -
Jeon DohShin,
Lefouili Yassine
Publication year - 2018
Publication title -
the rand journal of economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 3.687
H-Index - 108
eISSN - 1756-2171
pISSN - 0741-6261
DOI - 10.1111/1756-2171.12248
Subject(s) - licensee , monopoly , competition (biology) , business , payment , industrial organization , outcome (game theory) , sign (mathematics) , microeconomics , economics , license , computer science , finance , ecology , mathematical analysis , mathematics , biology , operating system
We analyze the competitive effects of bilateral cross‐licensing agreements in a setting with many competing firms. We show that firms can sustain the monopoly outcome if they can sign unconstrained bilateral cross‐licensing contracts. This result is robust to increasing the number of firms who can enter into a cross‐licensing agreement. We also investigate the scenario in which a cross‐licensing contract cannot involve the payment of a royalty by a licensee who decides ex post not to use the licensed technology. Finally, policy implications regarding the antitrust treatment of cross‐licensing agreements are derived.