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Chasing patents

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  • Menezes, Flavio Marques
  • Pitchford, Rohan

Abstract

We examine the problem faced by a company that wishes to purchase patents in the hands of two di¤erent patent owners. Complementarity of these patents in the production process of the company is a prime e¢ciency reason for them being owned (or licenced) by the company. We show that this very same complementarity can lead to patent owners behaving strategically in bargaining, and delaying their sale to the company. When the company is highly leveraged, such ine¢cient delay is limited. Comparative statics results are also obtained. Relevant applications include assembly of patents for drug treatments from the human genome, and land assembly.

Suggested Citation

  • Menezes, Flavio Marques & Pitchford, Rohan, 2001. "Chasing patents," FGV EPGE Economics Working Papers (Ensaios Economicos da EPGE) 411, EPGE Brazilian School of Economics and Finance - FGV EPGE (Brazil).
    • Handle: RePEc:fgv:epgewp:411
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    Cited by:

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    2. Thomas J. Miceli & Kathleen Segerson, 2007. "A Bargaining Model of Holdouts and Takings," American Law and Economics Review, American Law and Economics Association, vol. 9(1), pages 160-174.

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