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The RAND Journal of Economics, vol. 54, n. 3, 2023, pp. 387−415.
Pay-for-Delay
with Settlement Externalities
with
Emil Palikot
First draft: April, 2016
Abstract
Pay-for-delay patent settlements, where a potential entrant withdraws its challenge of the incumbent's patent and stays out of the market, in exchange for financial compensation, cost patients and taxpayers billions of dollars in higher pharmaceutical prices. In a market with one incumbent and several entrants, the possibility of conditioning settlements on litigation outcomes against other entrants results in the exclusion of all entrants from the market. When conditional contracts are infeasible, the incumbent either licenses or fights entry in court: the resulting competition benefiting consumers. Prohibiting pay-for-delay settlements increases litigation and may harm consumers by undermining licensing incentives.
Policy
piece
Pay-for-Delay,
Licensing and Litigation
with
Emil Palikot
First draft: April, 2019
Work
in progress
Decentralized
Pricing
First
draft: November, 2016
Abstract
When is it possible to decentralize the pricing decisions of a transaction to privately informed parties? This paper takes a mechanism design approach to study this question and shows that decentralized pricing is both necessary and sufficient for ex post incentive compatibility if the parties have negatively interdependent values from the transaction – as is often the case in transactions between buyers and sellers. On the contrary, with positive interdependence, a negative result is obtained. The results provide new insights into robust trading mechanisms, the equivalence between Bayesian and dominant strategy implementation, tax incidence, and pricing in two-sided markets.
Work
in progress
Competing
for Audience while Contracting on Advertising Sales
First
draft: June, 2019
Abstract
The
paper studies ad sales cooperation between competing media platforms.
An advertising sales representation agreement, whereby the sales
agent represents itself and the principal in selling ads, and pays
the principal for its audience, reduces content investment and
increases the price of advertising. The price effect is proportional
to the number of multi-homing consumers.