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R&R The RAND Journal of Economics

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.