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Patent pools and innovation in substitute technologies—evidence from the 19th-century sewing machine industry

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  • Ryan Lampe
  • Petra Moser

Abstract

type="main"> Patent pools, which combine complementary patents of competing firms, are expected to increase overall welfare but potentially discourage innovation in substitutes for the pool technology. This article exploits a new historical data set on changes in patenting and firm entry for a clearly defined pool technology and substitutes in the 19th-century sewing machine industry. This analysis reveals a substantial increase in innovation for an—albeit technologically inferior—substitute technology. Historical evidence suggests that the creation of a pool-diverted innovation toward an inferior substitute technology by creating differential license fees and litigation risks.

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  • Ryan Lampe & Petra Moser, 2013. "Patent pools and innovation in substitute technologies—evidence from the 19th-century sewing machine industry," RAND Journal of Economics, RAND Corporation, vol. 44(4), pages 757-778, December.
    • Handle: RePEc:bla:randje:v:44:y:2013:i:4:p:757-778
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    File URL: http://hdl.handle.net/10.1111/1756-2171.12035
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    References listed on IDEAS

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    4. Wen Wen & Marco Ceccagnoli & Chris Forman, 2013. "Patent Commons, Thickets, and Open Source Software Entry by Start-Up Firms," NBER Working Papers 19394, National Bureau of Economic Research, Inc.
    5. Tomoyuki Shimbo & Sadao Nagaoka & Naotoshi Tsukada, 2024. "Dynamic Effects of Patent Pools: Evidence from Inter-Generational Competition in the Optical Disc Industry," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 64(3), pages 383-419, May.
    6. Petra Moser, 2012. "Patent Laws and Innovation: Evidence from Economic History," NBER Working Papers 18631, National Bureau of Economic Research, Inc.
    7. Jay Pil Choi & Heiko Gerlach, 2015. "Patent pools, litigation, and innovation," RAND Journal of Economics, RAND Corporation, vol. 46(3), pages 499-523, September.
    8. Alexandrov, Alexei & Pittman, Russell & Ukhaneva, Olga, 2018. "Pricing of Complements in the U.S. freight railroads: Cournot versus Coase," MPRA Paper 86279, University Library of Munich, Germany.
    9. Michael J. Andrews, 2021. "Historical patent data: A practitioner's guide," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 30(2), pages 368-397, May.
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    12. Alexandrov, Alexei & Pittman, Russell & Ukhaneva, Olga, 2017. "Royalty stacking in the U.S. freight railroads: Cournot vs. Coase," MPRA Paper 78249, University Library of Munich, Germany.
    13. Ryan L. Lampe & Petra Moser, 2012. "Do Patent Pools Encourage Innovation? Evidence from 20 U.S. Industries under the New Deal," NBER Working Papers 18316, National Bureau of Economic Research, Inc.
    14. Schankerman, Mark & Galasso, Alberto, 2020. "Licensing Life-Saving Drugs for Developing Countries: Evidence from the Medicines Patent Pool," CEPR Discussion Papers 15544, C.E.P.R. Discussion Papers.
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