Abstract
This paper provides an economic analysis of reasonable royalty rates when the patents are selected by a standard-setting organizations (SSOs). Based on the ex-ante auction model proposed by Swanson and Baumol (2005) for determining reasonable rates for FRAND (fair, reasonable and nondiscriminatory) commitment, this paper analyzes and compares the equilibrium outcomes when the SSO selects a standard by profit criterion and by social welfare criterion. It is shown that the social welfare may be lower when the patents are selected to maximize the social welfare rather than to maximize the profits. This paper deals with the case when the upstream patent holders are independent as well as the case when they are vertically integrated with the downstream firms.
| Original language | English |
|---|---|
| Pages (from-to) | 30-61 |
| Number of pages | 32 |
| Journal | Journal of Economic Theory and Econometrics |
| Volume | 22 |
| Issue number | 3 |
| Publication status | Published - 2011 Sep 1 |
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Keywords
- Ex-ante auction
- FRAND commitment
- Licensing
- Royalty rate
- Standard setting
ASJC Scopus subject areas
- Economics and Econometrics
Cite this
Economic Analysis of FRAND Commitment. / Ahn, Illtae; Yoon, Kiho.
In: Journal of Economic Theory and Econometrics, Vol. 22, No. 3, 01.09.2011, p. 30-61.Research output: Contribution to journal › Article
}
TY - JOUR
T1 - Economic Analysis of FRAND Commitment
AU - Ahn, Illtae
AU - Yoon, Kiho
PY - 2011/9/1
Y1 - 2011/9/1
N2 - This paper provides an economic analysis of reasonable royalty rates when the patents are selected by a standard-setting organizations (SSOs). Based on the ex-ante auction model proposed by Swanson and Baumol (2005) for determining reasonable rates for FRAND (fair, reasonable and nondiscriminatory) commitment, this paper analyzes and compares the equilibrium outcomes when the SSO selects a standard by profit criterion and by social welfare criterion. It is shown that the social welfare may be lower when the patents are selected to maximize the social welfare rather than to maximize the profits. This paper deals with the case when the upstream patent holders are independent as well as the case when they are vertically integrated with the downstream firms.
AB - This paper provides an economic analysis of reasonable royalty rates when the patents are selected by a standard-setting organizations (SSOs). Based on the ex-ante auction model proposed by Swanson and Baumol (2005) for determining reasonable rates for FRAND (fair, reasonable and nondiscriminatory) commitment, this paper analyzes and compares the equilibrium outcomes when the SSO selects a standard by profit criterion and by social welfare criterion. It is shown that the social welfare may be lower when the patents are selected to maximize the social welfare rather than to maximize the profits. This paper deals with the case when the upstream patent holders are independent as well as the case when they are vertically integrated with the downstream firms.
KW - Ex-ante auction
KW - FRAND commitment
KW - Licensing
KW - Royalty rate
KW - Standard setting
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M3 - Article
AN - SCOPUS:80053550213
VL - 22
SP - 30
EP - 61
JO - Journal of Economic Theory and Econometrics
JF - Journal of Economic Theory and Econometrics
SN - 1229-2893
IS - 3
ER -