Working Paper: CEPR ID: DP10941
Authors: Yassine Lefouili; Dohshin Jeon
Abstract: We study bilateral cross-licensing agreements among N (>2) competing firms. We find that the industry-profit-maximizing royalty can be sustained as the outcome of bilaterally efficient agreements. This holds regardless of whether agreements are public or private and whether firms compete in quantities or prices. We extend this monopolization result to a general class of two-stage games in which firms bilaterally agree in the first stage to make each other payments that depend on their second-stage non-cooperative actions. Policy implications regarding the antitrust treatment of cross-licensing agreements are derived.
Keywords: Antitrust; Intellectual Property; Collusion; Crosslicensing; Royalties
JEL Codes: D14; F13; L24; L41; O34
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| bilateral crosslicensing agreements (L24) | monopolization outcomes (L12) |
| royalty agreements (L14) | joint profits (D33) |
| royalty agreements (L14) | competition outcomes (L13) |
| bilaterally efficient agreements (D61) | monopoly outcome (D42) |
| royalties (O34) | influence on outputs (C67) |
| Stackelberg effect (D43) | monopoly profits (D42) |
| coordination effect (C72) | restrict joint output (C24) |
| private agreements (L14) | sustainable monopoly outcome (D42) |
| number of firms involved (L19) | competitive outcomes (L13) |
| nature of competition (L13) | competitive outcomes (L13) |