How Antitrust Enforcement Can Spur Innovation: Bell Labs and the 1956 Consent Decree
- (pp. 328-59)
(Complimentary)
Abstract
Is compulsory licensing an effective antitrust remedy to increase innovation? To answer this question, we analyze the 1956 consent decree that settled an antitrust lawsuit against Bell, a vertically integrated monopolist charged with foreclosing the telecommunications equipment market. Bell was forced to license all its existing patents royalty-free, including those not related to telecommunications. We identify the effect of the consent decree on follow-on innovations building on Bell patents by using exactly matched non-Bell patents as control group. We show that the consent decree led to a lasting increase in innovation but only in markets outside the telecommunications sector.Citation
Watzinger, Martin, Thomas A. Fackler, Markus Nagler, and Monika Schnitzer. 2020. "How Antitrust Enforcement Can Spur Innovation: Bell Labs and the 1956 Consent Decree." American Economic Journal: Economic Policy, 12 (4): 328-59. DOI: 10.1257/pol.20190086Additional Materials
JEL Classification
- D45 Rationing; Licensing
- K21 Antitrust Law
- L12 Monopoly; Monopolization Strategies
- L24 Contracting Out; Joint Ventures; Technology Licensing
- L63 Microelectronics; Computers; Communications Equipment
- O31 Innovation and Invention: Processes and Incentives
- O34 Intellectual Property and Intellectual Capital
There are no comments for this article.
Login to Comment