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To link to full-text access for this article, visit this link: http://dx.doi.org/10.1016/j.infoecopol.2007.04.001 Byline: Benjamin E. Hermalin, Michael L. Katz Keywords: Product line; Product variety; Regulation; Network neutrality Abstract: We examine the welfare effects of product-line restrictions, such as those called for by some proponents of network neutrality regulation. We consider a platform that brings together households and application providers. We find that restricting a monopoly platform to a single product has the following effects: (a) application providers that would otherwise have purchased a low-quality variant are excluded from the market; (b) applications 'in the middle' of the market utilize higher and more efficient qualities; and (c) applications at the top utilize lower and less efficient qualities than otherwise. Total surplus may rise or fall, although the analysis suggests to us that harm to welfare is likely. We also examine a duopoly model and find that the welfare effects are similar. Author Affiliation: University of California, Berkeley Business Administration, Haas School of Business, Berkeley, CA 94720-1900, United States Article History: Received 26 July 2006; Revised 2 April 2007; Accepted 2 April 2007

To link to full-text access for this article, visit this link: http://dx.doi.org/10.1016/j.ijindorg.2005.06.003 Byline: Richard J. Gilbert, Michael L. Katz Keywords: Intellectual property; Licensing; Asymmetric information; Research and Development Abstract: Intellectual property owners often hold the rights to several patents, each of which is essential to make or use a product. We compare the welfare properties of package licenses, under which a licensee pays the same fee regardless of the number of technologies licensed, with component licenses, under which each technology is licensed separately and there is no quantity discount. A central finding is that a long-term package license can induce incentives to invent around patents and invest in complementary assets that are closer to their socially optimal levels than are those induced by a long-term component license. We also identify settings in which a short-term license is a partial substitute for a package license and a prohibition on package licensing induces parties to adopt contracts that result in less efficient complementary investment because of hold-up. Author Affiliation: University of California, Haas School of Business, Berkeley CA 94720-1900, United States Article History: Received 10 November 2004; Revised 27 April 2005; Accepted 22 June 2005 Article Note: (footnote) [star] The authors would like to thank seminar audiences at the United States Department of Justice Antitrust Division, the Institut D'Economie Industrielle, the Milan Workshop on Licensing, and the University of California at Berkeley for helpful comments and suggestions. The authors are especially grateful to Nancy Gallini, Benjamin Hermalin, Patrick Rey, Yossi Spiegel, Jean Tirole, and two anonymous referees.

Passage of the 1996 Telecommunications Act was primarily aimed at improving the quality of competition among local exchange carriers. However, proponents of the law encountered major difficulties in implementing an industrywide pricing policy as some incumbent local exchange carriers moved to limit the agency's regulatory measures. Survey results suggest that regulatory guidelines yield robust results than pure bargaining and that these guidelines are more efficiently carried out at the national level.