Publications by Bernhard Ganglmair
Licensing technology essential to a standard can present a holdup problem. After designing new pr... more Licensing technology essential to a standard can present a holdup problem. After designing new products incorporating a standard, a manufacturer could be confronted by an innovator asserting patent rights to essential technology. This holdup problem can be solved with a damages remedy provided by antitrust or some other body of law, but a damages remedy can reduce the innovator's licensing revenue and thereby retard innovation. The availability of an ex post damages remedy also alters the licensing terms in ex ante bargaining with the result that fewer socially beneficial R&D projects are undertaken.
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We analyze the sustainability of a conversation when one agent might be endowed with a piece of p... more We analyze the sustainability of a conversation when one agent might be endowed with a piece of private information that affects the payoff distribution to its benefit. Such a secret can compromise the sustainability of conversation. Even without an obligation, the secret holder will disclose its secret if it prevents preemptive termination of the conversation. The non-secret holder lacks this possibility and stops the conversation. Competition and limited effectiveness of the conversation amplify this result of early disclosure and render the conversation process less sustainable. We discuss policy and managerial implications for industry standard development and joint ventures.
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In this paper, we characterize adversarial decision-making as a choice between competing interpre... more In this paper, we characterize adversarial decision-making as a choice between competing interpretations of evidence ("models") constructed by interested parties. We show that if a court cannot perfectly determine which party's model is more likely to have generated the evidence, then adversaries face a tradeoff: a model further away from the most likely interpretation has a lower probability of winning, but also a higher payoff following a win. We characterize equilibrium, in which both adversaries construct optimal models, and use the characterization to compare adversarial decision-making to an inquisitorial benchmark. We find that adversarial decisions are biased, and the bias favors the party with the less likely, and more extreme, interpretation of the evidence. Court bias disappears as the court is better able to distinguish between the likelihoods of the competing models, or as the amount of evidence grows.
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In an environment in which sellers can reduce the probability of defective delivery through coope... more In an environment in which sellers can reduce the probability of defective delivery through cooperative investment, and in which enforcement of default remedies for breach of contract is imperfect, an optimal performance standard grants buyers the option to reject goods for some but not all defects, in other words, when the delivery is sufficiently defective and the seller said to be in "material breach" of contract. This optimal performance standard implements efficient cooperative investment more often under a policy that, in addition, allows buyers to collect compensation for non-delivery of the good (upon rightful rejection) than a policy that limits buyers' compensation to the recovery of the price. While contracts with liquidated damages (i.e., a customized compensation function) can solve the investment problem as long as court enforcement is not too imperfect (in which case optimal liquidated damages are excessive and likely not enforced), the doctrine of material breach with an option to reject performs well as a default rule.
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Working Papers by Bernhard Ganglmair
NBER Working Paper No. 17999, Apr 2012
In a model of industry standard setting with private information about firms' intellectual proper... more In a model of industry standard setting with private information about firms' intellectual property, we analyze (a) firms' incentives to contribute to the development and improvement of a standard, and (b) firms' decision to disclose the existence of relevant intellectual property to other participants of the standard-setting process. If participants can disclose after the end of the process and fully exploit their bargaining leverage, then patent holders aspire to disclose always after the end of the process. However, if a patent holder cannot rely on the other participants to always contribute to the process, then it may be inclined to disclose before the end of the process. We also analyze under which conditions firms enter cross-licensing agreements that eliminate the strategic aspect of patent disclosure, and show that, in an institutional setting that implies a waiver of intellectual property rights if patents are not disclosed timely, firms aspire to disclose before the end of the process. Finally, we study the effect of product-market competition on patent disclosure.
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Recent evidence of correlated trading among networked fund managers provides an indication that p... more Recent evidence of correlated trading among networked fund managers provides an indication that professional investors strategically exchange investment ideas. To examine how and why such information sharing arises, we design a laboratory experiment in which managers share ideas until one of them chooses to terminate the exchange for a competitive advantage or fails to generate a new idea. We find that managers' sharing increases in rivals' ability or subjective expectation that rivals will share in return (i.e., intention). Furthermore, expectations about rivals' intentions matter more than rivals' ability, and rivals' ability matters more than a manager's own ability.
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Default rules in contract law grant a buyer the right to terminate an installment contract (i.e.,... more Default rules in contract law grant a buyer the right to terminate an installment contract (i.e., a contract over the recurrent delivery in multiple periods) and cancel future deliveries if, and only if, past deliveries by the seller are sufficiently defective (putting the seller in "material breach"). This form of endogenous reversibility of the contract introduces memory and renders the installment contract non-divisible. Using an incomplete contracts framework with buyer's relationship-specific investment, I show that absent other contractual solutions an installment contract with endogenous reversibility can solve the buyer's holdup problem and implement the first-best outcome. Multiple independent contracts over one delivery each, installment contracts without the right to terminate, or installment contracts with exogenous reversibility cannot solve the buyer's holdup problem. I further show that the optimal termination right is not too buyer-friendly when the buyer has low bargaining power in ex post renegotiations. This result serves as an economic rationale for the restriction of termination rights to cases of material breach of contract.
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Working Paper 11-15, Apr 19, 2011
ABSTRACT In a model of industry standard setting with private information about firms' intellectu... more ABSTRACT In a model of industry standard setting with private information about firms' intellectual property, we analyze (a) firms' incentives to contribute to the development and improvement of a standard, and (b) firms' decision to disclose the existence of relevant intellectual property to other participants of the standard-setting process. If participants can disclose after the end of the process and fully exploit their bargaining leverage, then patent holders aspire to disclose always after the end of the process.
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Abstract We present a simple game-theoretic model that captures the differences in antitrust enfo... more Abstract We present a simple game-theoretic model that captures the differences in antitrust enforcement in the US and Europe. The European system is characterized by a combination of investigation, prosecution and adjudication within the European Commission as antitrust authority. This has raised concerns about the impartiality of the system.
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Abstract: By explicitly taking the interdependence of the decisions over children's labor and sch... more Abstract: By explicitly taking the interdependence of the decisions over children's labor and school attendance into account, we jointly estimate a two-equation system applying a bivariate probit model to data from Uganda.
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Papers by Bernhard Ganglmair
National Bureau of Economic Research, 2012
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Social Science Research Network, 2018
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Social Science Research Network, 2011
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ZEW Expertises, 2020
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Journal of Economic Behavior and Organization, Feb 1, 2020
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Social Science Research Network, 2022
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Social Science Research Network, 2020
Public policy toward innovation faces a trade-off: Increasing the compensation of successful inve... more Public policy toward innovation faces a trade-off: Increasing the compensation of successful inventors increases dynamic efficiency by spurring technological progress, but it decreases static efficiency by enlarging a wedge between price and marginal cost. In making this trade-off, public policy is guided by two insights—economic growth is the prime driver of social welfare gains, and technological progress is the prime driver of economic growth. Patent and copyright law, therefore, were designed to help inventors and authors appropriate a significant share of the value of their inventions and writings. Antitrust law neither revokes nor restricts any right granted by patent law, and antitrust law can contribute little in resolving disputes arising from commitments to license on FRAND terms. Economic theory and empirical research into innovation and the patent system reveal a complex and varied landscape. Two robust conclusions are that too little is invested in innovation and that both the innovation process and the role of patents in the process vary greatly across industries and inventions. Depending on the precise question posed, theory predicts that monopoly can enhance or retard innovation, and data generally support the hypothesis that both monopolies and unconcentrated markets are relatively inhospitable to innovation. Although patents are critical to innovation in the pharmaceutical and chemical industries, they are unimportant in many industries, and patent protection generally has been found to have no effect on the pace of innovation.
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Publications by Bernhard Ganglmair
Working Papers by Bernhard Ganglmair
Papers by Bernhard Ganglmair