Optimal formation rules for patent pools

Patent pools in the framework of Lerner and Tirole (Am Econ Rev 94:691-711, 2004) may enhance or reduce social welfare. This paper presents a pool formation mechanism which prevents welfare decreasing pool equilibria to emerge, and which encourages welfare enhancing pools to form. In order to destabilize welfare decreasing pools, forcing coalitions members to offer individual licenses in parallel to the pool has been suggested. I show that in general, this mechanism is not an efficient antitrust tool. However, the mechanism combined with exclusive pool membership avoids stability problems of welfare enhancing pools, while it creates instability of welfare decreasing pools.