Merging to licenseinternal vs. external patentee
ISSN: 1134-8984
Year of publication: 2003
Issue: 6
Type: Working paper
More publications in: Documentos de Trabajo BILTOKI
Abstract
In this paper, we endogenize the decision of a research laboratory that owns a patented process innovation on whether to remain independent as an external patentee or to merge with a manufacturing firm, becoming an internal to the industry patentee. We show that a merger is profitable only for the case of small innovations whereas only large innovations make it welfare improving. As a consequence, the antitrust authority should forbid all (profitable) mergers.