Non-drastic patents licensing, market structure and symmetric information among licensees

Abstract

We analyze the dynamics of non-drastic patents lasting for several periods when its owner is asymmetrically informed in relation to their users. Patentees learn -by using the patent- their cost characteristics, and there is symmetric information among them. In this setting, we show that the trade off between the sampling effect and the dissipation effect determines the patent efficient allocation from the market viewpoint. We also show that the incentive compatibility problem in some contracts -those ones which are based on the users' information- precludes sometimes the patent owner to implement efficient allocations. Finally, it is shown that, from the social viewpoint, a duopoly in each production period is the optimal market structure to be generated.