Patent pool under endogenous technology choice

It is generally believed that patent pools by complementary input suppliers make the consumers, final goods producers and the society better off by reducing the complements problem. We show that this may not be the case under endogenous technology choice. Although a patent pool reduces input price, it may make the consumers and the society worse off by reducing innovation. We also show that a patent pool makes the input suppliers better off, but it may not make all final goods producers better off compared with non-cooperation between the input suppliers.

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