Chen, Yongmin (2011): Refusal to Deal, Intellectual Property Rights, and Antitrust.
Download (220kB) | Preview
A vertically integrated firm, having acquired the intellectual property (IP) through innovation to become an input monopolist, can extract surplus by supplying efficient downstream competitors. That the monopolist would refuse to do so is puzzling and has led to numerous debates in antitrust. In this paper, I clarify the economic logic of refusal to deal, and identify conditions under which prohibiting such conduct would raise or lower consumer and social welfare. I further show how IP protection (as determined by IP laws) and restrictions on IP holders' conduct (as determined by antitrust laws) may interact to affect innovation incentive and post-innovation market performance.
|Item Type:||MPRA Paper|
|Original Title:||Refusal to Deal, Intellectual Property Rights, and Antitrust|
|Keywords:||Refusal to Deal; Intellectual Property Rights; IP protection; Antitrust; innovation|
|Subjects:||O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights
L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance
L - Industrial Organization > L4 - Antitrust Issues and Policies
|Depositing User:||Yongmin Chen|
|Date Deposited:||03. Jul 2011 13:57|
|Last Modified:||16. Feb 2013 12:55|
Aghion, Philippe and Patrick Bolton. 1987. "Contracts as a Barrier to Entry." American Economic Review, 77: 388-401.
Carlton, Dennis and Michael Waldman. 2002. "The Strategic Use of Tying to Preserve and Create Market Power in Evolving Industries." Rand Journal of Economics, 33: 194-220.
Carlton, Dennis and Michael Waldman. 2002. "Competition, Monopoly, and Aftermarkets." Journal of Law, Economics, and Organization, 26: 54-91.
Chen, Yongmin. 2001. "On Vertical Mergers and Their Competitive Effects." RAND Journal of Economics, 32: 667-685.
Chen, Yongmin and Michael Riordan. 2007. "Vertical Integration, Exclusive Dealing, and Ex Post Cartelization." RAND Journal of Economics, 38: 1-21.
Chen, Yongmin and David Sappington. 2011. "Exclusive Contracts, Innovation, and Welfare." American Economic Journals: Microeconomics, 3: 194-220.
Choi, Jay P. and Sang-Seung Yi. 2000. "Vertical Foreclosure and the Choice of Input Specifications." RAND Journal of Economics, 31: 717-743.
Choi, Jay P. and Christodoulos Stefanadis. 2001. "Tying, Investment, and the Dynamic Leverage Theory." Rand Journal of Economics, 32: 52-71.
Green, Jerry and Suzanne Scotchmer. 1995. "On the Division of Profit in Sequential Innovation." RAND Journal of Economics, 26: 20-33.
Mankiw, Gregory N. and Michael D. Whinston. 1986. "Free Entry and Social Inefficiency." RAND Journal of Economics, 17: 48-58.
Ordover, Janusz A., Garth Saloner, and Steven C. Salop. 1990. "Equilibrium Vertical Foreclosure." American Economic Review, 80: 127-142.
Scotchmer, Suzanne. 2004. Innovation and Incentives. Cambridge: MIT Press.
Segal, Ilya and Michael D. Whinston. 2007. "Antitrust in Innovative Industries." American Economic Review, 97: 1703-30.
Vickers. John. 2010. "Competition Policy and Property Rights." Economic Journal, 120: 375-392.
Whinston, Michael D. 1990. "Tying, Foreclosure, and Exclusion." American Economic Review, 80: 837-859.
Williamson, Oliver E. The Economic Institutions of Capitalism. New York: Free Press, 1985.
Available Versions of this Item
- Refusal to Deal, Intellectual Property Rights, and Antitrust. (deposited 03. Jul 2011 13:57) [Currently Displayed]