Still Looking for Lost Profits: The Case of Horizontal Competition

When infringement of a patent dissipates profit relative to the licensing agreement that would otherwise occur, damages under the lost-profit rule deter infringement, and otherwise not. We develop this point in a general model and give two examples. However, joint profit might not be dissipated by infringement. An important example is where there are restrictions on licensing that arise from competition policy. Department of Economics, London School of Economics and CEPR. [email protected]. Department of Economics and GSPP, University of California, Berkeley 94720-7320, and NBER. [email protected]. The author thanks the Toulouse Network on Information Technologies for financial support.