Optimal bid disclosure in patent license auctions under alternative modes of competition

Cuihong Fan; Byoung Heon Jun; Elmar G. Wolfstetter

doi:10.1016/j.ijindorg.2016.03.001

Optimal bid disclosure in patent license auctions under alternative modes of competition

Cuihong Fan, Byoung Heon Jun, Elmar G. Wolfstetter

Department of Economics

Research output: Contribution to journal › Article › peer-review

5 Citations (Scopus)

Abstract

The literature on patent license auctions in oligopoly assumed that the auctioneer reveals the winning bid and stressed that this gives firms an incentive to bid high in order to signal an aggressive output strategy in a downstream Cournot market game, and conversely bid low to signal acquiescent pricing in a Bertrand market game. The present paper examines the information revealed by publishing the winning or the losing or no bid, assuming an oligopoly with differentiated goods. We rank disclosure rules and find that it is not optimal for the innovator to disclose the winning bid, regardless of the mode of competition.

Original language	English
Pages (from-to)	1-32
Number of pages	32
Journal	International Journal of Industrial Organization
Volume	47
DOIs	https://doi.org/10.1016/j.ijindorg.2016.03.001
Publication status	Published - 2016 Jul 1

Keywords

Auctions
Innovation
Licensing

ASJC Scopus subject areas

Industrial relations
Aerospace Engineering
Economics and Econometrics
Economics, Econometrics and Finance (miscellaneous)
Strategy and Management
Industrial and Manufacturing Engineering

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

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10.1016/j.ijindorg.2016.03.001

Cite this

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title = "Optimal bid disclosure in patent license auctions under alternative modes of competition",

abstract = "The literature on patent license auctions in oligopoly assumed that the auctioneer reveals the winning bid and stressed that this gives firms an incentive to bid high in order to signal an aggressive output strategy in a downstream Cournot market game, and conversely bid low to signal acquiescent pricing in a Bertrand market game. The present paper examines the information revealed by publishing the winning or the losing or no bid, assuming an oligopoly with differentiated goods. We rank disclosure rules and find that it is not optimal for the innovator to disclose the winning bid, regardless of the mode of competition.",

keywords = "Auctions, Innovation, Licensing",

author = "Cuihong Fan and Jun, {Byoung Heon} and Wolfstetter, {Elmar G.}",

note = "Funding Information: This paper replaces Fan et al. (2014b ) where we analyze optimal bid disclosure in the special case of Cournot competition with perfect substitutes. We thank an anonymous referee, Emmanuelle Auriol, Richard J. Gilbert, Vijay Krishna, and Giancarlo Spagnolo for comments and suggestions. Research support by Korea University, the Deutsche Forschungsgemeinschaft (DFG), SFB Transregio 15, “Governance and Efficiency of Economic Systems”, and the National Natural Science Foundation of China (grant: 71371116 ) is gratefully acknowledged. Publisher Copyright: {\textcopyright} 2016 Elsevier B.V. All rights reserved.",

year = "2016",

month = jul,

day = "1",

doi = "10.1016/j.ijindorg.2016.03.001",

language = "English",

volume = "47",

pages = "1--32",

journal = "International Journal of Industrial Organization",

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AU - Fan, Cuihong

AU - Jun, Byoung Heon

AU - Wolfstetter, Elmar G.

N1 - Funding Information: This paper replaces Fan et al. (2014b ) where we analyze optimal bid disclosure in the special case of Cournot competition with perfect substitutes. We thank an anonymous referee, Emmanuelle Auriol, Richard J. Gilbert, Vijay Krishna, and Giancarlo Spagnolo for comments and suggestions. Research support by Korea University, the Deutsche Forschungsgemeinschaft (DFG), SFB Transregio 15, “Governance and Efficiency of Economic Systems”, and the National Natural Science Foundation of China (grant: 71371116 ) is gratefully acknowledged. Publisher Copyright: © 2016 Elsevier B.V. All rights reserved.

PY - 2016/7/1

Y1 - 2016/7/1

N2 - The literature on patent license auctions in oligopoly assumed that the auctioneer reveals the winning bid and stressed that this gives firms an incentive to bid high in order to signal an aggressive output strategy in a downstream Cournot market game, and conversely bid low to signal acquiescent pricing in a Bertrand market game. The present paper examines the information revealed by publishing the winning or the losing or no bid, assuming an oligopoly with differentiated goods. We rank disclosure rules and find that it is not optimal for the innovator to disclose the winning bid, regardless of the mode of competition.

AB - The literature on patent license auctions in oligopoly assumed that the auctioneer reveals the winning bid and stressed that this gives firms an incentive to bid high in order to signal an aggressive output strategy in a downstream Cournot market game, and conversely bid low to signal acquiescent pricing in a Bertrand market game. The present paper examines the information revealed by publishing the winning or the losing or no bid, assuming an oligopoly with differentiated goods. We rank disclosure rules and find that it is not optimal for the innovator to disclose the winning bid, regardless of the mode of competition.

KW - Auctions

KW - Innovation

KW - Licensing

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U2 - 10.1016/j.ijindorg.2016.03.001

DO - 10.1016/j.ijindorg.2016.03.001

M3 - Article

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SN - 0167-7187

VL - 47

SP - 1

EP - 32

JO - International Journal of Industrial Organization

JF - International Journal of Industrial Organization

ER -

Optimal bid disclosure in patent license auctions under alternative modes of competition

Abstract

Keywords

ASJC Scopus subject areas

UN SDGs

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