Price discrimination and patent policy
Patent and antitrust policy are often presumed to be in conflict. As an important example, there is ongoing controversy about whether price discrimination by a patent holder is an illegal or socially undesirable exploitation of monopoly power. In this article. we show that no conflict exists i...
| Main Authors: | , |
|---|---|
| Format: | Working Paper |
| Language: | en_US |
| Published: |
MIT Energy Lab
2005
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| Online Access: | http://hdl.handle.net/1721.1/27213 |
| _version_ | 1811092182276243456 |
|---|---|
| author | Hausman, Jerry A. MacKie-Mason, Jeffrey K. |
| author_facet | Hausman, Jerry A. MacKie-Mason, Jeffrey K. |
| author_sort | Hausman, Jerry A. |
| collection | MIT |
| description | Patent and antitrust policy are often presumed to be in conflict. As an
important example, there is ongoing controversy about whether price discrimination by a
patent holder is an illegal or socially undesirable exploitation of monopoly power. In this
article. we show that no conflict exists in many price discrimination cases. Even ignoring
the (dynamic) effects on incentives for innovation, third-degree price discrimination by
patent holders can raise (static) social welfare. In fact, Pareto improvements may well
occur. Welfare gains occur because price discrimination allows patent holders: (a) to open
new markets and (b) to achieve economies of scale or learning. Further, even in cases where
discrimination incurs static welfare losses, it may be efficient relative to other mechanisms,
such as length of patent life, for rewarding innovators with profits. |
| first_indexed | 2024-09-23T15:14:17Z |
| format | Working Paper |
| id | mit-1721.1/27213 |
| institution | Massachusetts Institute of Technology |
| language | en_US |
| last_indexed | 2024-09-23T15:14:17Z |
| publishDate | 2005 |
| publisher | MIT Energy Lab |
| record_format | dspace |
| spelling | mit-1721.1/272132019-04-11T09:10:35Z Price discrimination and patent policy Hausman, Jerry A. MacKie-Mason, Jeffrey K. Patent and antitrust policy are often presumed to be in conflict. As an important example, there is ongoing controversy about whether price discrimination by a patent holder is an illegal or socially undesirable exploitation of monopoly power. In this article. we show that no conflict exists in many price discrimination cases. Even ignoring the (dynamic) effects on incentives for innovation, third-degree price discrimination by patent holders can raise (static) social welfare. In fact, Pareto improvements may well occur. Welfare gains occur because price discrimination allows patent holders: (a) to open new markets and (b) to achieve economies of scale or learning. Further, even in cases where discrimination incurs static welfare losses, it may be efficient relative to other mechanisms, such as length of patent life, for rewarding innovators with profits. Center for Energy Policy Research of the MIT Energy Laboratory 2005-09-15T13:59:07Z 2005-09-15T13:59:07Z 1988 Working Paper 19524104 http://hdl.handle.net/1721.1/27213 en_US MIT-EL 88-007WP 1603207 bytes application/pdf application/pdf MIT Energy Lab |
| spellingShingle | Hausman, Jerry A. MacKie-Mason, Jeffrey K. Price discrimination and patent policy |
| title | Price discrimination and patent policy |
| title_full | Price discrimination and patent policy |
| title_fullStr | Price discrimination and patent policy |
| title_full_unstemmed | Price discrimination and patent policy |
| title_short | Price discrimination and patent policy |
| title_sort | price discrimination and patent policy |
| url | http://hdl.handle.net/1721.1/27213 |
| work_keys_str_mv | AT hausmanjerrya pricediscriminationandpatentpolicy AT mackiemasonjeffreyk pricediscriminationandpatentpolicy |