| This dissertation explores the consequences of licensing in two specific settings: intellectual property (IP) transfers and cable television (CATV) operations. The first section models an interaction between IP regulations and competition policy. Hybrid licences tie trade secret rights (which have no fixed expiration) to related patent rights (which expire). Level royalty hybrid licences, which charge a single royalty for both rights, have been prohibited on the basis that these contracts leverage market power into the post-patent period. The model explains this form of licensing as a means of privately implementing an efficient infinite-term licensing outcome without requiring a change in the length of the patent term.; Two fundamental questions addressed in the second and third sections are: "Does the cost structure of the CATV industry justify exclusive licensing?" and "How do the pricing rules imposed by the CRTC impact the performance of CATV operators?" A flexible cost function and the cost functions used in earlier research, for comparison, are employed to evaluate economies of scale achievable within the areas licensed by the CRTC. In the second section, the results support the natural monopoly argument that can justify the exclusive licensing of CATV operations.; The results of the analysis in the third section suggest that, although the pricing constraints imposed by the CTC restrict cable firms to less-than-monopoly pricing, the price structure can be distinguished from marginal-cost pricing, even for large systems operating under constant returns to scale. Estimates of market power and its associated marginal efficiency cost suggest that the rules in themselves did not bring prices into line: the observed improvement in performance arises from external, non-rule based sources. The rules do not appear to have adequately addressed the trade-off of static efficiency and investment incentives. However, it is not possible to reject the hypothesis that over the sample period the CRTC's policy of exclusive licensing coupled with its pricing rules have induced the pursuit of a dynamic development strategy aimed at exploiting future scale economies.*; *Originally published in DAI Vol. 59, No. 7. Reprinted here with corrected abstract. |
