Vargas Barrenechea, Martin (2008): Licensing Probabilistic Patents and Liability Rules: The Duopoly Case.
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In this paper a dynamic game is used to compare licensing of a cost reduction innovations under lost profits (LP) and unjust enrichment (UE), both damage rules used by courts in the calculation of damages when a patent has been infringed.
The innovation, whose property right belongs to a firm (patent holder) has a positive probability to be declared invalid in a court. The market is composed by two homogeneous firms that compete in quantities (Cournot).
Licensing by using royalty rates is preferred compared with fixed fees, it is observable little licensing (just big innovations).
LP is not always better or worst than UE, but the major of the cases consumers and society are better off under UE and in the major of cases LP benefits more to the patent holder.
|Item Type:||MPRA Paper|
|Original Title:||Licensing Probabilistic Patents and Liability Rules: The Duopoly Case|
|Keywords:||Patents; innovation economics; probabilistic property rights; damage rules|
|Subjects:||L - Industrial Organization > L0 - General
K - Law and Economics > K4 - Legal Procedure, the Legal System, and Illegal Behavior > K42 - Illegal Behavior and the Enforcement of Law
O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights
|Depositing User:||Martin Barrenechea|
|Date Deposited:||09 Sep 2009 23:48|
|Last Modified:||24 Aug 2016 03:20|
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 J.P. Choi. How Reasonable is the Reasonable Royalty Rate? Damage Rules and Probabilistic Intellectual Property Rights. Technical report, Michigan StateWorking Paper (February 2006).
 J. Farrell and C. Shapiro. How Strong Are Weak Patents? American Economics Review, forthcoming.
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 X.H. Wang. Fee versus royalty licensing in a Cournot duopoly model. Economics Letters, 60(1):55–62, 1998.
Available Versions of this Item
Licensing probabilistic Patents: The duopoly case. (deposited 09 Aug 2008 11:12)
Licensing Probabilistic Patents and Liability Rules: The Duopoly Case. (deposited 18 Dec 2008 06:58)
- Licensing Probabilistic Patents and Liability Rules: The Duopoly Case. (deposited 09 Sep 2009 23:48) [Currently Displayed]
- Licensing Probabilistic Patents and Liability Rules: The Duopoly Case. (deposited 18 Dec 2008 06:58)