How Licensing Resolves Hold-Up: Evidence from a Dynamic Panel Data Model with Unobserved Heterogeneity

Arbeitspapier

In a patent thicket licensing provides a mechanism to either avoid or resolve hold-up. Firms' R&D incentives will differ depending on how licensing is used. In this paper we study the choice between ex ante licensing to avoid hold-up and ex post licensing to resolve it. Building on a theoretical model of a patent portfolio race, firms' choices of licensing contracts are modelled. We derive several hypotheses from the model and find support for these using data from the semiconductor industry. The empirical results show that firms' relationships in product markets and technology space jointly determine the type of licensing contract chosen. Implications for the regulation of licensing are discussed. We estimate a dynamic panel data model with unobserved heterogeneity and a lagged dependent variable. A method suggested by Wooldridge (2005) is employed to estimate a random effects probit model using conditional maximum likelihood.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: SFB/TR 15 Discussion Paper ; No. 105

Classification and Topics

• Classification: Wirtschaft ; Oligopoly and Other Imperfect Markets ; Antitrust Policy: Other ; Microelectronics; Computers; Communications Equipment
• Subject: Hold-Up Problem ; Licensing ; Innovation ; Patent Race ; Patent Thicket

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Siebert, Ralph ; von Graevenitz, Georg
• Event: Veröffentlichung
• (who): Sonderforschungsbereich/Transregio 15 - Governance and the Efficiency of Economic Systems (GESY)
• (where): München
• (when): 2006

Further information

• DOI: doi:10.5282/ubm/epub.13446
• Handle: http://hdl.handle.net/10419/93853
• URN: urn:nbn:de:bvb:19-epub-13446-6
• Last update: 10.03.2025, 11:43 AM CET