Optimal bid disclosure in patent license auctions under Bertrand/Cournot competition*

The literature on patent license auctions in oligopoly assumed that the auctioneer reveals the winning bid and stressed that this gives firms an incentive to bid high in order to signal an aggressive output strategy in a downstream Cournot market game, and conversely bid low to signal acquiescent pricing in a Bertrand market game. The present paper examines the information revealed by publishing the winning or the losing or no bid, assuming an oligopoly with differentiated goods. We rank disclosure rules and find that it is generally optimal for the innovator to disclose no bid, regardless of the mode of competition