We analyze the competitive effects of bilateral cross-licensing agreements in a setting with many competing firms. We show that firms can sustain the monopoly outcome if they can sign unconstrained bilateral cross-licensing contracts. This result is robust to increasing the number of firms who can enter into a cross-licensing agreement. We also investigate the scenario in which a cross-licensing contract cannot involve the payment of a royalty by a licensee who decides ex post not to use the licensed technology. Finally, policy implications regarding the antitrust treatment of cross-licensing agreements are derived.
Cross-Licensing; Royalties; Collusion; Antitrust and Intellectual Property;
- D43: Oligopoly and Other Forms of Market Imperfection
- L13: Oligopoly and Other Imperfect Markets
- L24: Contracting Out • Joint Ventures • Technology Licensing
- L41: Monopolization • Horizontal Anticompetitive Practices
- O34: Intellectual Property and Intellectual Capital
The RAND Journal of Economics, vol. 49, n. 3, 2018, pp. 656–671