Work

How Antitrust Enforcement Can Spur Innovation: Bell Labs and the 1956 Consent Decree

Year: 2017

Type: article

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. (JEL D45, K21, L12, L24, L63, O31, O34)

Source: American Economic Journal Economic Policy

DOI: 10.1257/pol.20190086

Authors: Martin Watzinger, Thomas A. Fackler, Markus Nagler, Monika Schnitzer

Institutions: Centre for Economic Policy Research, Ludwig-Maximilians-Universität München, Ifo Institute for Economic Research, Friedrich-Alexander-Universität Erlangen-Nürnberg

Language: English

Topic: Intellectual Property and Patents

Subfield: Management of Technology and Innovation

Field: Business, Management and Accounting

Domain: Social Sciences

SDG: Industry, innovation and infrastructure

Open Access status: bronze

OpenAlex ID: W2584718918

FWCI: 9.024

Cites: 33

Cited by: 80

Related to: 10