The Smallest Salable Patent-Practicing Unit Experiment, General Purpose Technologies And The Coase Theorem

April 26, 2017

In the past years, some Standard-Setting Organizations active in wireless communications have experimented new technology pricing principles which upset this basic economic wisdom. One of those changes is the “SSPPU” experiment. SSPPU wants to prevent upstream technology developers to claim all or a share of the value added to the end product sold by original equipment manufacturers on downstream markets. This practice has received wide media coverage in the smartphone industry. Some authors have claimed that this creates a problem of “royalty stacking.” At the end of the line, royalty stacking is said to decrease innovation to the detriment of society at large. SSPPU pricing has some appeal. But on second thoughts, its implications are so likely counterproductive that it should remain what it is, an experiment.

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