Innovation economics: The interplay among technology standards, competitive conduct, and economic performance

Journal of Competition Law and Economics

Volumn 9, Issue 4, 2013, Pages 777-825

  Spulber, Daniel F ^a  

^a NORTHWESTERN UNIVERSITY   (United States)

Author keywords

[No Author keywords available]

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EID: 84888862389     PISSN: 17446414     EISSN: 17446422     Source Type: Journal    
DOI: 10.1093/joclec/nht041     Document Type: Article

References (174)

1. Carl Shapiro, Navigating the Patent Thicket: Cross Licenses, Patent Pools, and Standard Setting, in 1 INNOVATION POLICY AND THE ECONOMY 119, 128 (Adam B. Jaffe, Josh Lerner & Scott Stern eds., Nat'l Bureau of Econ. Research 2001) ("standard setting very often has especially strong elements of both the complements problem and the holdup problem.")
2. Mark R. Patterson, Inventions, Industry Standards, and Intellectual Property, 17 BERKELEY TECH. L.J. 1043, 1044 (2002) ("Some of the demand for products that comply with the standard may be for the inherent technical advantages of the invention. A patentee is generally entitled to revenues attributable to this demand. But some of the demand may also be created by the adoption of the standard. The patentee is not entitled to revenues attributable to this demand.")
3. Daniel G. Swanson & William J. Baumol, Reasonable and Nondiscriminatory (Rand) Royalties, Standards Selection, and Control of Market Power, 73 ANTITRUST L.J. 1, 4 (2005-2006) ("there is the risk that the standard-setting process may itself be utilized to confer market or monopoly power beyond that contemplated by the intellectual property laws, which, in turn, may distort competition, impede technological dissemination and yield returns to innovation that are too high." (emphasis in original))
4. Mark A. Lemley & Carl Shapiro, Patent Holdup and Royalty Stacking, 85 TEX. L. REV. 1991, 2016 (2007) ("These problems of holdup and royalty stacking can be severe in the case of private standard setting.")
5. Joseph Farrell, John Hayes, Carl Shapiro & Theresa Sullivan, Standard Setting, Patents, and Hold-Up, 74 ANTITRUST L.J. 603, 607 (2007) ("Ex ante, before an industry standard is chosen, there are various attractive technologies, but ex post, after industry participants choose a standard and take steps to implement it, alternative technologies become less attractive. Thus, a patent covering a standard may confer market power ex post that was much weaker ex ante.").
6. Kai-Uwe Kuhn, Fiona Scott Morton & Howard Shelanski, Standard Setting Organizations Can Help Solve the Essential Patents Licensing Problem, 3COMPETITION POL'Y INT'L CPI ANTITRUST CHRON. (SPECIAL ISSUE) (2013) ("SSOs constrain the license terms for SEPs because of the substantial market power necessarily enjoyed by the owner of an SEP in a successful standard.").
7. For discussions of technology standards in the law literature that illustrate these policy conclusions, see Michael G. Cowie & Joseph P. Lavelle, Patents Covering Industry Standards: The Risks to Enforceability Due to Conduct Before Standard-Setting Organizations, 30 AIPLA Q.J. 95 (2002)
8. Joseph Kattan, Antitrust Implications: Disclosures and Commitments to Standard-Setting Organizations, 16 ANTITRUST 22 (2002)
9. Mark A. Lemley, Intellectual Property Rights and Standard-Setting Organizations, 90 CAL. L. REV. 1889 (2002)
10. Janice M. Mueller, Patent Misuse Through the Capture of Industry Standards, 17 BERKELEY TECH. L.J. 623 (2002)
11. Gil Ohana, Marc Hansen & Omar Shah, Disclosure and Negotiation of Licensing Terms Prior to Adoption of Industry Standards: Preventing Another Patent Ambush?, 24 EUR. COMPETITION L. REV. 644 (2003)
12. Handbook on the Antitrust Aspects of Standards Setting, 2004 A.B.A. SEC. ANTITRUST L. chs. 15-17
13. Mark A. Lemley & Kimberly A. Moore, Ending Abuse of Patent Continuations, 84 B.U. L. REV. 63 (2004)
14. M. Sean Royall, Standard Setting and Exclusionary Conduct: The Role of Antitrust in Policing Unilateral Abuses of Standard-Setting Processes, 18 ANTITRUST 44 (2004)
15. Robert A. Skitol, Concerted Buying Power: Its Potential for Addressing the Patent Holdup Problem in Standard Setting, 72 ANTITRUST L.J. 727 (2005)
16. Carl Shapiro, Injunctions, Hold-Up, and Patent Royalties, 12AM. L. ECON. REV. 280 (2010).
17. EDWARD H. CHAMBERLIN, THE THEORY OF MONOPOLISTIC COMPETITION (Harvard Univ. Press 8th ed. 1965)
18. EDWARD S. MASON, ECONOMIC CONCENTRATION AND THE MONOPOLY PROBLEM (Holiday House 1964)
19. Joe S. Bain, Relation of Profit Rate to Industry Concentration: American Manufacturing, 1936-1940, 65 Q.J. ECON. 293 (1951)
20. JOE S. BAIN, BARRIERS TO NEW COMPETITION: THEIR CHARACTER AND CONSEQUENCES IN MANUFACTURING INDUSTRIES (Harvard Univ. Press 1956)
21. JOE S. BAIN, INDUSTRIAL ORGANIZATION (Chapman & Hall 1959)
22. CARL KAYSEN & DONALD F. TURNER, ANTITRUST POLICY: AN ECONOMIC AND LEGAL ANALYSIS (Harvard Univ. Press 1959)
23. HARVEY J. GOLDSCHMID, HAROLD M. MANN & J. F. WESTON, INDUSTRIAL CONCENTRATION: THE NEW LEARNING (Little Brown 1974)
24. Leonard W. Weiss, The Structure-Conduct-Performance Paradigm and Antitrust, 127 U. PA. L. REV. 1104 (1979)
25. Herbert J. Hovenkamp, United States Competition Policy in Crisis: 1890- 1955, 94MINN. L. REV. 311 (2009).
26. GEORGE J. STIGLER, THE ORGANIZATION OF INDUSTRY (Univ. of Chicago Press 1983)
27. RICHARD A. POSNER, ANTITRUST LAW: AN ECONOMIC APPROACH (1st ed. Univ. of Chicago Press 1976)
28. Richard A. Posner, The Chicago School of Antitrust Analysis, 127 U. PA. L. REV. 925 (1979)
29. ROBERT H. BORK, THE ANTITRUST PARADOX: A POLICY AT WAR WITH ITSELF (Free Press 1978)
30. Frank H. Easterbrook, Vertical Arrangements and the Rule of Reason, 53 ANTITRUST L.J. 135 (1984).
31. JEAN TIROLE, THE THEORY OF INDUSTRIALORGANIZATION (MIT Press 1988), and DANIEL F. SPULBER, REGULATION ANDMARKETS (MIT Press 1989), for overviews.
32. Timothy F. Bresnahan & Peter C. Reiss, Do Entry Conditions Vary Across Markets?, 18 BROOKINGS PAPERS ON ECON. ACTIVITY 833 (1987)
33. Peter C. Reiss & Pablo T. Spiller, Competition and Entry in Small Airline Markets, 32 J.L. & ECON. S179 (1989)
34. Timothy F. Bresnahan & Peter C. Reiss, Entry in Monopoly Markets, 57 REV. ECON. STUD. 531 (1990)
35. Timothy F. Bresnahan & Peter C. Reiss, Entry and Competition in Concentrated Markets, 99 J. POL. ECON. 977 (1991)
36. Steven T. Berry, Estimation of a Model of Entry in the Airline Industry
37. ECONOMETRICA 889 (1992). See also Richard Schmalensee, Inter-Industry Studies of Structure and Performance, in 2 HANDBOOK OF INDUSTRIAL ORGANIZATION 951 (Richard Schmalensee & Robert D. Willig eds., Elsevier 1989)
38. JOHN SUTTON, SUNK COSTS AND MARKET STRUCTURE: PRICE COMPETITION, ADVERTISING, AND THE EVOLUTION OF CONCENTRATION (MIT Press 1991)
39. Liran Einav & Jonathan D. Levin, Empirical Industrial Organization: A Progress Report, 24 J. ECON. PERSP. 145 (2010).
40. Firm-level analyses include measures of R&D output based on patents and patent citations. See, e.g., Zvi Griliches, Patent Statistics as Economic Indicators: A Survey, 28J. ECON. LIT. 1661 (1990)
41. David Hirshleifer, Po-Hsuan Hsu & Dongmei Li, Innovative Efficiency and Stock Returns, J. FIN. ECON. 632 (2013).
42. The combination of economic theory with statistical models is sometimes referred to as structural econometric modeling. See Peter C. Reiss & Frank A. Wolak, Structural Econometric Modeling: Rationales and Examples from Industrial Organization, in 6A HANDBOOK OF ECONOMETRICS 4277 (James J. Heckman & Edward E. Leamer eds., Elsevier 2007).
43. Daniel F. Spulber, Competing Inventors and the Incentive to Invent, 22 INDUS. CORP. CHANGE (2013)
44. Daniel F. Spulber, How Do Competitive Pressures Affect Incentives to Innovate When There Is a Market for Inventions?, 122 J. POL. ECON. (forthcoming 2014).
45. FED. TRADE COMM'N, THE EVOLVING IP MARKETPLACE: ALIGNING PATENT NOTICE AND REMEDIES WITH COMPETITION 22 (2011) [hereinafter FTC REPORT]. The FTC recommends antitrust scrutiny of patent owners and standards organizations, suggesting that "[c]ourts should cap the royalty at the incremental value of the patented technology over alternatives available at the time the standard was chosen." For an analysis of these arguments
46. Richard A. Epstein, F. Scott Kieff & Daniel F. Spulber, The FTC, IP, and SSOs: Government Hold-Up Replacing Private Coordination, 8 J. COMPETITION L. & ECON. 1 (2012).
47. The foreclosure argument is also associated with traditional Industrial Organization. See, e.g., Herbert Hovenkamp, Harvard, Chicago, and Transaction Cost Economics in Antitrust Analysis, 55 ANTITRUST BULL. 613 (2010) ("The leverage theory itself never dominated Harvard industrial organization theory or competition policy. Rather the concern was foreclosure, or the idea that firms could use pricing, vertical restrictions or intellectual property (IP) licensing practices to exclude rivals from otherwise profitable markets.").
48. Joseph Farrell and Garth Saloner introduce a game theoretic analysis of standard setting suggesting that a combination of market interaction and standard-setting organizations generates better outcomes than only one type of institution. Joseph Farrell & Garth Saloner, Coordination Through Committees and Markets, 19 RAND J. ECON. 235 (1988).
49. also Joseph Farrell & Tim Simcoe, Choosing the Rules for Consensus Standardization, 43 RAND J. ECON. 235 (2012)
50. Gastón Llanes & Joaquín Poblete, Ex-Ante Agreements in Standard Setting and Patent-Pool Formation, 23 J. ECON.&MGMT. STRATEGY (forthcoming 2014).
51. Among the many operating system platforms are Google TV (along with Sony and LG Electronics), Sony Bravia TV (including the Sony Entertainment Network and the Playstation game platform), Samsung Smart TV, Panasonic's Viera system, LG Electronic NetCast Entertainment Access, Microsoft Xbox 360, and Vizio Smart TVs. In addition, there is the Smart TV Alliance involving Toshiba, LG Electronics, Philips, and Panasonic. According to Hyun-suk Kim, the head of Samsung's TV business, "[a]lliances may be possible but we're not at that stage yet.... Everybody is using their own platform right now, but the small companies find it very difficult to get content and services. Having a unified platform would be very helpful for the industry but I'm not sure it's the right time"
52. Samsung. See Cornelius Rahn & Jonathan Browning, TV Makers Join Forces Against Smartphone Giants, N.Y. TIMES (Sept. 5, 2012), http://www.nytimes.com/2012/09/06/technology/06iht-srtvs06.html?_r=0.
53. Daniel F. Spulber, Unlocking Technology: Antitrust and Innovation, 4 J. COMPETITION L. & ECON. 915 (2008). On the question of technology standardization
54. also James A. Brander & Jonathan Eaton, Product Line Rivalry, 74 AM. ECON. REV. 323 (1984)
55. Michael L. Katz & Carl Shapiro, Network Externalities, Competition, and Compatibility, 75 AM. ECON. REV. 424 (1985)
56. Joseph Farrell & Garth Saloner, Installed Base and Compatibility: Innovation, Product Preannouncement, and Predation, 76 AM. ECON. REV. 940 (1986)
57. Michael L. Katz & Carl Shapiro, Technology Adoption in the Presence of Network Externalities, 94J. POL. ECON. 822 (1986)
58. Joseph Farrell & Garth Saloner, Standardization, Compatibility, and Innovation, 16 RAND J. ECON. 70 (1985)
59. Carmen Matutes & Pierre Regibeau, "Mix and Match": Product CompatibilityWithout Network Externalities, 19 RAND J. ECON. 221 (1988).
60. Talia Bar & Aija E. Leiponen, Committee Composition and Networking in Standard Setting: The Case of Wireless Telecommunications, 23 J. ECON. & MGMT. STRATEGY (forthcoming 2014). Leiponen finds that firms that participate in industry consortia may exercise greater influence within standards organizations. Aija Elina Leiponen, Competing Through Cooperation: The Organization of Standard Setting inWireless Telecommunications, 54MGMT. SCI. 1904 (2008).
61. Justus Baron & Tim Pohlmann, Who Cooperates in Standards Consortia-Rivals or Complementors?, 9 J. COMPETITION L. & ECON. 905 (2013).
62. Anne Layne-Farrar, Gerard Llobet & Jorge Padilla, Payments and Participation: The Incentives to Join Cooperative Standard Setting Efforts, 23J. ECON. & MGMT. STRATEGY (forthcoming 2014).
63. David J. Teece & Edward F. Sherry, Standards Setting and Antitrust, 87 MINN. L. REV. 1913 (2003).
64. Magna Carta Translation, NAT'L ARCHIVES & RECORDS ADMIN. (Nicholas Vincent trans., copy. Sotheby's Inc. 2007), http://www.archives.gov/exhibits/featured_documents/magna_carta/translation.html.
65. Competition for downstream rents among suppliers of complements was first noted by AUGUSTIN COURNOT, RESEARCHES INTO THE MATHEMATICAL PRINCIPLES OF THE THEORY OF WEALTH (Nathaniel Bacon trans., Macmillan 1927) (1838). For additional studies of competition among suppliers of complements
66. Nirvikar Singh & Xavier Vives, Price and Quantity Competition in a Differentiated Duopoly, 15 RAND J. ECON. 546 (1984)
67. Carmen Matutes & Pierre Regibeau Mix and Match: Product CompatibilityWithout Network Externalities, RAND J. ECON. 221 (1988)
68. Carmen Matutes & Pierre Regibeau, Compatibility and Bundling of Complementary Goods in a Duopoly, 40J. INDUS. ECON. 37 (1992)
69. Nicholas Economides & Steven C. Salop, Competition and Integration Among Complements, and Network Market Structure, 40 J. INDUS. ECON. 105 (1992).
70. CARLISS Y. BALDWIN & KIM B. CLARK, DESIGN RULES: THE POWER OF MODULARITY (MIT Press 2000)
71. Andrea Gamba & Nicola Fusari, Valuing Modularity as a Real Option, 55 MGMT. SCI. 1877 (2009).
72. When firms' competencies differ, component competition may be more efficient than systems competition. See Joseph Farrell, Hunter K. Monroe & Garth Saloner, The Vertical Organization of Industry: Systems Competition Versus Component Competition, 7 J. ECON. & MGMT. STRATEGY (1998).
73. Carliss Y. Baldwin, Where Do Transactions Come From? Modularity, Transactions, and the Boundaries of Firms, 17 INDUS. & CORP. CHANGE 155 (2007)
74. Rebecca M. Henderson & Kim B. Clark, Generational Innovation: The Reconfiguration of Existing Systems and the Failure of Established Firms, 35 ADMIN. SCI. Q. 9 (1990).
75. About ETSI, ETSI, http://www.etsi.org/about.
76. Interoperability, ETSI, http://www.etsi.org/standards/interoperability.
77. What Are Standards?, IEEE STANDARDS ASS'N, http://standards.ieee.org/develop/overview. html.
78. Verizon Commc'ns Inc. v. Law Offices of Curtis V. Trinko, LLP, 540 U.S. 398, 411 (2004)
79. also Daniel F. Spulber & Christopher S. Yoo, Mandating Access to Telecom and the Internet: The Hidden Side of Trinko, 107 COLUM. L. REV. 1822 (2007).
80. Anne Layne-Farrar, A. Jorge Padilla & Richard Schmalensee, Pricing Patents for Licensing in Standard-Setting Organizations: Making Sense of FRAND Commitments, 74 ANTITRUST L.J. 671
81. [2007(] ("the list of disclosed 'essential' patents for a given standard is likely to be a mixture of the patents that firms can readily identify, those that firms are not too reluctant to disclose for valid strategic reasons, and those that may or may not be genuinely essential for implementation but are included as insurance against the threat of non-disclosure litigation.").
82. This incentive may be tempered by the SSO's FRAND restrictions on royalties for patents that are declared to be essential to a standard
83. David J. Goodman & Robert A. Myers, 3G Cellular Standards and Patents, in 1 2005 INTERNATIONAL CONFERENCE ON WIRELESS NETWORKS, COMMUNICATIONS AND MOBILE COMPUTING 415 (Inst. Electrical & Electronic Eng'rs, Inc. 2005).
84. Benjamin Chiao, Josh Lerner & Jean Tirole, The Rules of Standard Setting Organizations: An Empirical Analysis, 38 RAND J. ECON. 905, 925 (2007).
85. Sascha Segan, WiMAX vs. LTE: Should You Switch?, PCMAG.COM (May 16, 2012), http://www.pcmag.com/article2/0,2817,2403490,00.asp.
86. Justus Baron & Julia Schmidt, Technological Standardization, Endogenous Productivity and Transitory Dynamics 2 (Working Paper May 2013), available at http://www.law.northwestern.edu/ faculty/programs/searlecenter/innovationeconomics/documents/Technological_Standardization_Endogenous_Productivity_and_Transitory_Dynamics.pdf (as indicators of technological change, "standards are economically and technologically highly meaningful, because they reflect the actual adoption (instead of invention) of an innovation and trigger technological diffusion." (emphasis in original)).
87. Josh Lerner & Jean Tirole, Public Policy Toward Patent Pools, in 8 INNOVATION POLICY AND THE ECONOMY 157 (Adam B. Jaffe, Josh Lerner & Scott Stern eds., Nat'l Bureau of Econ. Research 2008).
88. U.S. DEP'T OF JUSTICE & FED. TRADE COMM'N, ANTITRUST ENFORCEMENT AND INTELLECTUAL PROPERTY RIGHTS: PROMOTING INNOVATION AND COMPETITION 35-36 (2007) (internal citations omitted), available at www.justice.gov/atr/public/hearings/ip/ chapter_2.pdf [hereinafter FTC ANTITRUST GUIDELINES].
89. How Are Standards Made?, IEE STANDARDS ASS'N, http://standards.ieee.org/develop/process. html.
90. Letter from S. J. Bhatia, President and CEO, American National Standards Institute (ANSI), to Congressman Bart Gordon, Chairman, House Committee on Science and Technology (Nov. 12, 2009), available at http://publicaa.ansi.org/sites/apdl/Documents/Standards% 20Activities/Critical%20Issues/Gordon%20Inquiry/Gordon_ANSI_response.pdf.
91. Peter Camesasca, Gregor Langus, Damien Neven & Pat Treacy, Injunctions for Standard-Essential Patents: Justice Is Not Blind, 9 J. COMPETITION L. & ECON. 285 (2013).
92. Gregor Langus, Vilen Lipatov & Damien Neven, Standard-Essential Patents: Who Is Really Holding Up (And When)?, 9 J. COMPETITION L. & ECON. 253 (2013).
93. Armen A. Alchian, Property Rights, in THE CONCISE ENCYCLOPEDIA OF ECONOMICS (David R. Henderson ed., Liberty Fund 2008), available at http://www.econlib.org/library/Enc/ PropertyRights.html (the three general aspects of property rights) (last visited Nov. 2, 2013).
94. JOHN S. MILL, PRINCIPLES OF POLITICAL ECONOMY 932 (John W. Parker 1st ed. 1848), quoted in Fritz Machlup & Edith Penrose, The Patent Controversy in the Nineteenth Century, 10 J. ECON. HIST. 1 (1950).
95. WILLIAM D. NORDHAUS, INVENTION, GROWTH, AND WELFARE: A THEORETICAL TREATMENT OF TECHNOLOGICAL CHANGE ch. 5 (MIT Press 1969)
96. William D. Nordhaus, The Optimum Life of a Patent: Reply, 62 AM. ECON. REV. 428 (1972)
97. F.M. Scherer, Nordhaus' Theory of Optimal Patent Life: A Geometric Reinterpretation, 62 AM. ECON. REV. 422 (1972)
98. Richard J. Gilbert & Carl Shapiro, Optimal Patent Length and Breadth, 21 RAND J. ECON. 106 (1990).
99. Michele Boldrin & David K. Levine, The Case Against Patents, 27 J. ECON. PERSP. 3 (2013).
100. Edmund W. Kitch, Elementary and Persistent Errors in the Economic Analysis of Intellectual Property, 53 VAND. L. REV. 1727 (2000).
101. also Edmund W. Kitch, Nature and Function of the Patent System, 20 J.L. & ECON. 265 (1977) ("This essay argues that the patent system performs a function not previously noted: to increase the output from resources used for technological innovation.").
102. Paul Goldstein, Copyright, 55L. & CONTEMP. PROBS. 79 (1992)
103. Christopher S. Yoo, Copyright and Product Differentiation, 79 N.Y.U. L. REV. 212 (2004).
104. On the market for inventions, see Ashish Arora, Andrea Fosfuri & Alfonso Gambardella, Markets for Technology and Their Implications for Corporate Strategy, 10 INDUS. & CORP. CHANGE (2001)
105. Ashish Arora & Alfonso Gambardella, Ideas for Rent: An Overview of the Market for Technology, 19 INDUS. & CORP. CHANGE 775 (2010).
106. U.S. DEP'T OF JUSTICE & FED. TRADE COMM'N, ANTITRUST ENFORCEMENT AND INTELLECTUAL PROPERTY RIGHTS: PROMOTING INNOVATION AND COMPETITION 2 (2007), available at www.justice.gov/atr/public/hearings/ip/222655.pdf.
107. Joseph Bertrand, Review of A. A. Cournot, Recherches sur les Principes Mathématiques de la Théorie de la Richesse and L. Walras, Théorie Mathématique de la Richesse Sociale, 67 J. DES SAVANTS 499 (1883)
108. Harold Demsetz, Why Regulate Utilities?, 11 J.L. & ECON. 55 (1968)
109. William J. Baumol, Contestable Markets: An Uprising in the Theory of Industry Structure, 72 AM. ECON. REV. 1 (1982).
110. Mark A. Lemley & Carl Shapiro, Probabilistic Patents, 19J. ECON. PERSP. 75, 75 (2005) ("economists have increasingly recognized that a patent does not confer upon its owner the right to exclude but rather a right to try to exclude by asserting the patent in court.... When a patent holder asserts its patent against an alleged infringer, the patent holder is rolling the dice. If the patent is found invalid, the property right will have evaporated.").
111. also Carl Shapiro, Antitrust Limits to Patent Settlements, 34 RAND J. ECON. 391 (2003).
112. ALFRED D. CHANDLER, THE VISIBLE HAND: THE MANAGERIAL REVOLUTION IN AMERICAN BUSINESS (Harvard Belknap 1977)
113. DAVID B. AUDRETSCH, INNOVATION AND INDUSTRY EVOLUTION (MIT Press 1995).
114. Reinhilde Veugelers & Bruno Cassiman, Make and Buy in Innovation Strategies: Evidence from Belgian Manufacturing Firms, 28 RES. POL'Y 63 (1999).
115. Gabriele Pellegrino, Mariacristina Pivaa & Marco Vivarelli, Young Firms and Innovation: A Microeconometric Analysis, 23 STRUCTURAL CHANGE & ECON. DYNAMICS 329 (2012).
116. Mark A. Lemley, Rational Ignorance at the Patent Office, 95NW. U. L. REV. 1495 (2001).
117. LESLEY ADKINS & ROY A. ADKINS, HANDBOOK TO LIFE IN ANCIENT ROME 177 (Facts on File 2004) (discussing land disputes between plebs and patricians in ancient Rome).
118. Adam Mossoff, The Trespass Fallacy in Patent Law (George Mason L. & Econ. Research Paper No. 12-54, 2012), available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2126595.
119. Adam Mossoff, The Rise and Fall of the First American Patent Thicket: The Sewing Machine War of the 1850s, 53 ARIZ. L. REV. 165 (2011) (showing how private ordering dealt with patent complements in sewing machines).
120. Lawrence M. DeBrock, Market Structure, Innovation, and Optimal Patent, 28 J.L. & ECON. (1985)
121. Jennifer F. Reinganum, The Timing of Innovation: Research, Development, and Diffusion, in 1 HANDBOOK OF INDUSTRIAL ORGANIZATION 849 (Richard Schmalensee & Robert D. Willig eds., Elsevier 1989)
122. Michael R. Baye & Heidrun C. Hoppe, The Strategic Equivalence of Rent-Seeking, Innovation, and Patent-Race Games, 44 GAMES & ECON. BEHAV. (2003).
123. Vincenzo Denicolò, Patent Races and Optimal Patent Breadth and Length, 44J. INDUS. ECON. 249 (1996)
124. Ignatius Horstmann, Glenn M. MacDonald & Alan Slivinski, Patents as Information Transfer Mechanisms: To Patent or (Maybe) Not to Patent, 93 J. POL. ECON. 837 (1985).
125. Inventions are said to be "non-rivalrous" when they are a form of information that can be used by multiple individuals, in contrast to scarce goods in which one individual's consumption reduces the amount of the good available for others
126. Kenneth J. Arrow, Economic Welfare and the Allocation of Resources for Invention, in THE RATE AND DIRECTION OF INVENTIVE ACTIVITY 609, 615 (Nat'l Bureau of Econ. Research 1962).
127. Harold Demsetz, Information and Efficiency: Another Viewpoint, 12 J.L. & ECON. 1 (1969).
128. Daniel F. Spulber, Tacit Knowledge with Innovative Entrepreneurship, 30 INT'L J. INDUS. ORG. 641 (2012).
129. Damien Geradin, Anne Layne-Farrar & A. Jorge Padilla, Royalty Stacking in High Tech Industries: Separating Myth from Reality (Center for Econ. Pol'y Research Discussion Paper No. 0701, 2007).
130. Carlos J. Serrano, The Dynamics of the Transfer and Renewal of Patents, 41 RAND J. ECON. (2010).
131. also Alberto Galasso, Mark Schankerman & Carlos J. Serrano, Trading and Enforcing Patent Rights, 44 RAND J. ECON. 275 (2013).
132. The legal literature also considers the effects of competitive pressures on innovation
133. Richard T. Rapp, The Misapplication of the Innovation Market Approach to Merger Analysis, 64 ANTITRUST L.J. 19 (1995)
134. Richard J. Gilbert, Looking for Mr. Schumpeter: Where AreWe in the Competition-Innovation Debate?, in 6 INNOVATION POLICY AND THE ECONOMY 159 (Adam B. Jaffe, Josh Lerner & Scott Stern eds., Nat'l Bureau of Econ. Research 2006)
135. Jonathan B. Baker, Beyond Schumpeter vs. Arrow: How Antitrust Fosters Innovation, 74 ANTITRUST L.J. (2007)
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137. JOSEPH A. SCHUMPETER, CAPITALISM, SOCIALISM AND DEMOCRACY (1942).
138. Bo Carlsson, Zoltan J. Acs, David B. Audretsch & Pontus Braunerhjelm, Knowledge Creation, Entrepreneurship, and Economic Growth: A Historical Review, 18 INDUS. CORP. CHANGE 1193, 1194 (2009).
139. Much earlier, Schumpeter had observed that competition increases innovation because entrepreneurs who challenge incumbent firms engage in "creative destruction."
140. JOSEPH A. SCHUMPETER, THEORIE DER WIRTSCHAFTLICHEN ENTWICKLUNG (1912), translated as THE THEORY OF ECONOMIC DEVELOPMENT (Harvard Univ. Press 1934).
141. Franklin M. Fisher & Peter Temin, Returns to Scale in Research and Development: What Does the Schumpeterian Hypothesis Imply?, 81J. POL. ECON. 56 (1973) (citing Henry H. Villard, Competition, Oligopoly, and Research, 66 J. POL. ECON. 483 (1958)
142. Jacob Schmookler, Bigness, Fewness, and Research, 67 J. POL. ECON. 628 (1959)
143. James S. Worley, Industrial Research and the New Competition, 69 J. POL. ECON. 183 (1961)
144. Edwin Mansfield, Industrial Research and Development Expenditures: Determinants, Prospects, and Relation to Size of Firm and Inventive Output, 72 J. POL. ECON. 319 (1964)
145. Daniel Hamberg, Size of Firm, Oligopoly, and Research: The Evidence, 30 CAN. J. ECON. POL. SCI. 62 (1964)
146. F.M. Scherer, Size of Firm, Oligopoly, and Research: A Comment, 31 CAN. J. ECON. POL. SCI. 256 (1965)
147. F.M. Scherer, Firm Size, Market Structure, Opportunity, and the Output of Patented Inventions, 55 AM. ECON. REV. 1097 (1965)
148. William S. Comanor, Research and Technical Change in the Pharmaceutical Industry, 47 REV. ECON. STAT. 182 (1965)
149. William S. Comanor, Market Structure, Product Differentiation, and Industrial Research, 81 Q.J. ECON. 639 (1967)
150. Jesse W. Markham, Market Structure, Business Conduct, and Innovation, 55 AM. ECON. REV. 323 (1965)
151. Henry Grabowski & Dennis Mueller, Industrial Organization: The Role and Contribution of Econometrics, 60 AM. ECON. REV. (1970)).
152. also Joel B. Rosenberg, Research and Market Share: A Reappraisal of the Schumpeter Hypothesis, 25J. INDUS. ECON. 101 (1976) (finding a negative relationship between internal R&D, as measured by the percentage of total employment allocated to R&D, and the firm's market share). The Schumpeterian Hypothesis also is related to studies of the "differential productivity growth puzzle."
153. Richard R. Nelson & Sidney G. Winter, In Search of Useful Theory of Innovation, 6RES. POL'Y 36 (1977) (and references therein).
154. John Sutton, Schumpeter Lecture: Technology and Market Structure, 40 EUR. ECON. REV. 511 (1996).
155. J. Gregory Sidak & David Teece, Dynamic Competition in Antitrust Law, 5 J. COMPETITION L. & ECON. 581 (2009).
156. Michael A. Heller, The Tragedy of the Anticommons: Property in the Transition from Marx to Markets, 111 HARV. L. REV. 621 (1998)
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