Gilbert and Katz (2006) (GK) show that allowing (pure) patent bundling increases the incentives for patent owners to enter into “long-term” patent licensing that commits them not to expropriate licensees’ sunk costs in complementary assets with opportunistic licensing terms. We interpret...

I derive a Net Innovation Pressure (NIP) formula based on logic that is similar to the logic underlying Upward Pricing Pressure (UPP) and that takes account of R&D spillovers. As with UPP, diversion is a key determinant of NIP, but the price-cost margin is not. The formula, which is quite...