In a technology market, either multiple-patent pools are typically formed or dedicated outsiders form a patent pool. Regarding this, my paper analyzes the coalition formation of a patent pool under the general assumption of the complementarity of patents and examines how patent pools a affect firm’s profit and social welfare. The paper shows that a patent holder’s grand coalition cannot be formed when its complementarity is beyond a certain threshold. Therefore the tragedy of the anti-commons (one of the multi-marginalization problems) occurs in a technology market, i.e., patent holders always set excessively high price above the patent costs compared to a joint-profit maximizing level. This causes the under-use of patent technology and loss of consumer surplus and social welfare.
