Patent pools and the dynamic incentives to R&D

Patent pools are cooperative agreements between several patent owners to bundle the sale fo their respective licences. In this paper the authors analyse their consequences on the speed of the sale of their respective licences. In this papier, they analyze their consequences on the speed of the innovation process. They adopt an ex ante prespective and study the impact of possible pool formation on the incentives to innovate. Because participation in the creation of a pool acts as a bonus reward on R&D activity, they show that a firm's investment pattern is upward sloping over time before pool formation, and decreases afterwards. The smaller the set of initial contributors, the higher this effect. A pool formation mechanism based on a proposal by the industry and acceptant / refusal by the competition authority may induce overinvestment in early innovations and lead to a delayed clearance date, that is suboptimal from an ex ante viewpoint.<BR>