Sougata Poddar (The University of Iowa) 

will give a presentation on : 

Does Strategic Shelving of Patents Lead to Market Dominance?

Abstract : 

In many markets, we observe scenarios where a firm sometimes pays to acquire new technologies (patents), however, does not use them for its use, i.e., shelves them. By shelving the technology, the technology-acquiring firm can prevent its competitor from using it and thus maintain its strategic advantage in the market. This may create market dominance. We show that this happens often when an outside innovator uses exclusive licensing to transfer technology where potential licensees have different efficiency levels of production and have asymmetric absorptive capacities of the transferred technology. However, we also show when this will not happen in the same environment. We find that under fixed fee licensing, when the size of the innovation is not big, technology is shelved, whereas if the innovation is large, it is not shelved. With per-unit royalty licensing, we find interesting non-monotonicity with respect to shelving and no shelving as the size of the innovation increases. We also find out the optimal licensing contract of the innovator in this environment and potential welfare loss due to shelving on the society.