nep-ind New Economics Papers
on Industrial Organization
Issue of 2020‒07‒13
three papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. Patent Portfolios and Firms Technological Choices By Stefano Comino; Fabio M. Manenti
  2. Slowdown antitrust investigations by decentralization By Emilie Dargaud; Armel Jacques
  3. Solving Structural Competition Problems Require Changes in EU Merger Regulation By Koski, Heli

  1. By: Stefano Comino (Department of Economics and Statistics - University of Udine); Fabio M. Manenti (Department of Economics and Management - University of Padova)
    Abstract: In many industrial sectors, firms amass large patents portfolios to reinforce their bargaining position vis a vis competitors. In a context where patents have a pure strategic nature, we discuss how the presence and the effectiveness of a patent system affect firms technological decisions. Specifically, we present a two-stage game where firms first choose whether to agglomerate (i.e. develop technologies for the same technological territory) or to separate (i.e. develop technologies for different territories) and then they take their patenting decisions. We show that strong patents may distort technological choices yielding to firms to follow inefficient technological trajectories in an attempt to reduce competitors’ patenting activity. While an increase in the strength of patent rights − i.e. the extent to which patents can be used to extract value − undoubtedly distorts firms choices, the impact of a larger scope − the degree to which patent protection carries out in the adjacent ares as well − is ambiguous. We also discuss how such distortions change when one firm is prevented from obtaining its optimal number of patents and when firms patenting activities generate additional market value.
    Keywords: patent portfolios, patent strength and scope, technological territory, strategic patenting
    JEL: D43 L13
    Date: 2020–06
  2. By: Emilie Dargaud (Univ Lyon, Université Lumière Lyon 2, GATE, UMR 5824, F-69130 Ecully, France); Armel Jacques (CEMOI TEPP-CNRS (FR2042), Université de La Réunion, Faculté de Droit et d'Economie, 15, avenue René Cassin, 97715 Saint-Denis messag cedex 9)
    Abstract: When multi-product firms make simultaneous price-fixing agreements in different markets, the introduction of leniency programs may induce firms to compartmentalize their activities. Doing so results in slowdown antitrust investigations and decentralized ?rm can easily request leniency for a second cartel after the detection of an other. We study how variation of fine reduction may produce procompetitive but also procollusive effects.
    Keywords: Collusion, antitrust policy, leniency programs, multimarket contact, organizational form
    JEL: K42 L22 L41
    Date: 2020
  3. By: Koski, Heli
    Abstract: Abstract EU competition law does not effectively address or make it possible to resolve some of the structural competition problems identified in the markets. The Commission plans to design and launch a new competition tool to ensure fair and undistorted competition, benefit consumers, and increase innovation. Economic research suggests that the market dominance of large platform companies may shift to traditional product markets through exploiting consumer data. Firms increasingly utilize algorithms, and also the non-dominant companies may use them for anti-competitive practices. The scope of a new competition tool should limit neither to dominant-based enforceability nor to sectors identified as being prone to structural competition problems. Under current EU legislation, it is not possible to intervene in acquisitions where global technology giants prevent small companies from becoming market challengers. It is necessary to amend EU merger control legislation to address the acquisitions of technology giants, potentially reducing future competition, even when the acquired companies’ turnover is relatively low. In the assessment of competitive impacts of acquisitions, it is essential to evaluate whether the acquiree’s innovation can challenge the buyer in its market in the future.
    Keywords: Competition, Competition policy, Algorithms, Data economy, Acquisitions
    JEL: G34 L1 L41
    Date: 2020–06–23

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