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Effects of patent privateering on settlements and R&D under sequential market entry

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  • Klapper, Felix B.
  • Siemering, Christian

Abstract

We investigate patent litigation, settlements and R&D incentives on a market where two firms develop technologies in order to obtain patents and produce goods. Firms may sell IP rights to a Patent Assertion Entity (PAE) that acts as intermediary for patent monetization. We find that compared to simultaneous market entry, the effect of this so-called patent privateering is mitigated if firms enter sequentially. Furthermore, we show that privateering may decrease industry profits by distortion of R&D incentives even when there is no rent extraction by the PAE.

Suggested Citation

  • Klapper, Felix B. & Siemering, Christian, 2024. "Effects of patent privateering on settlements and R&D under sequential market entry," Information Economics and Policy, Elsevier, vol. 66(C).
    • Handle: RePEc:eee:iepoli:v:66:y:2024:i:c:s0167624524000027
    DOI: 10.1016/j.infoecopol.2024.101080
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    References listed on IDEAS

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    1. Jay Pil Choi & Heiko Gerlach, 2018. "A Model Of Patent Trolls," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 59(4), pages 2075-2106, November.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Intellectual property rights; Patent assertion entities; Patent licensing; R&D; Innovation; Sequential entry;
    All these keywords.

    JEL classification:

    • D2 - Microeconomics - - Production and Organizations
    • K2 - Law and Economics - - Regulation and Business Law
    • K4 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior
    • L4 - Industrial Organization - - Antitrust Issues and Policies
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

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