The British and American radio manufacturing industries developed on the basis of strong national patent monopolies, held by Marconi and RCA. Revenue maximization constituted a special case of a situation analyzed in the vertical integration literature, where a monopolist supplying an intermediate product faces a potentially competitive market of assemblers that can use it in variable proportions with competitively priced inputs. Marconi avoided substitution by bundling its royalties into a general license. Meanwhile RCA initially chose integration, aiming to market all domestic radios (produced for it by General Electric and Westinghouse). Strong anti-trust pressures soon compelled RCA to license its patents, based on a fixed percentage of wholesale receiver prices. Marconi faced no such pressures and maintained its fixed charge per tube systemprogressively raising royalty/total cost ratios and stimulating innovation around the patent by tube manufacturers who developed multi-functional tubes. These were less cost-effective than the simpler, more interchangeable, U.S. tubes, but lowered royalty payments and, thus, assemblers' overall costs. British set design was thus biased toward a high-cost path, preventing the introduction of low-cost 'midget' radios, which formed the basis of the continued prosperity of the U.S. industry following market saturation in the early 1930s.