Article

Cross-Licensing and Competition

Doh-Shin Jeon, and Yassine Lefouili

Abstract

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.

Keywords

Cross-Licensing; Royalties; Collusion; Antitrust and Intellectual Property;

JEL codes

  • D43: Oligopoly and Other Forms of Market Imperfection
  • L13: Oligopoly and Other Imperfect Markets
  • L24: Contracting Out • Joint Ventures • Technology Licensing
  • L41: Monopolization • Horizontal Anticompetitive Practices
  • O34: Intellectual Property and Intellectual Capital

Replaces

Doh-Shin Jeon, and Yassine Lefouili, Cross-Licensing and Competition, TSE Working Paper, n. 15-577, May 19, 2015, revised December 2017.

Doh-Shin Jeon, and Yassine Lefouili, Cross-Licensing and Competition, IDEI Working Paper, n. 850, May 19, 2015.

Reference

Doh-Shin Jeon, and Yassine Lefouili, Cross-Licensing and Competition, The RAND Journal of Economics, vol. 49, n. 3, 2018, pp. 656–671.

Published in

The RAND Journal of Economics, vol. 49, n. 3, 2018, pp. 656–671