Do Patent Holdup and Royalty Stacking Lead to Systematically Excessive Royalties?

Name: Do Patent Holdup and Royalty Stacking Lead to Systematically Excessive Royalties?
Cite: 4 J. Competition L. & Econ. 535
Year: 2008
Bluebook cite: Einer Elhauge, Do Patent Holdup and Royalty Stacking Lead to Systematically Excessive Royalties?, 4 J. Competition L. & Econ. 535 (2008).
Author: Einer Elhauge
URL: 4 JCOMLE 535
Item Type: article
Summary: â€œSome recent literature has concluded that patent remedies result in systematically excessive royalties because of holdup and stacking problems. This article shows that this literature is mistaken. The royalty rates predicted by the holdup models are often (plausibly most of the time) below the true optimal rate. Further, those predicted royalty rates are overstated because of incorrect assumptions about constant demand, one-shot bargaining, and informational symmetry. . . . Royalty stacking does not lead to royalties that exceed the optimal rate, contrary to this literature, but in fact tends to produce royalties that are at or below the optimal rate.â€

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