American Economic Journal:
Economic Policy
ISSN 1945-7731 (Print) | ISSN 1945-774X (Online)
How Antitrust Enforcement Can Spur Innovation: Bell Labs and the 1956 Consent Decree
American Economic Journal: Economic Policy
vol. 12,
no. 4, November 2020
(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
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