Benny Moldovanu and Aner Sela

"Patent licensing to Bertrand competitors," International Journal of Industrial Organization Volume 21, Issue 1, January 2003, pp. 1-13.
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Abstract: A cost-reducing process innovation protected by a patent is sold to one of several firms engaged in price competition. There is incomplete information about production costs. Our main result is that classical auction mechanisms do not allocate the innovation efficiently. The inefficiency results also extends to "patent races" frameworks.