Working Paper: CEPR ID: DP5987
Authors: Klaus M. Schmidt
Abstract: In this paper we investigate the pricing incentives of IP holders and compare the equilibrium royalty rates charged by vertically integrated IP holders with those of non- integrated IP holders. We show that under many circumstances non-integrated companies are likely to charge lower royalties than their vertically integrated counterparts. The results of this paper are of special relevance for the analysis of competition in CDMA and WCDMA technology licensing, where some IP holders are not vertically integrated into handset and infrastructure manufacturing, while others are.
Keywords: complementary patents; ip rights; licensing; vertical integration
JEL Codes: D43; L15; L41
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| vertical integration (L22) | higher royalty rates (D45) |
| raising rivals' costs effect (D43) | increased costs for downstream competitors (L11) |
| increased costs for downstream competitors (L11) | enhanced market share and profits (L19) |
| cooperation through cross-licensing agreements (L24) | reduced royalties (D45) |
| non-cooperative settings (C72) | higher royalties (D33) |