Standards, consortia, and innovation

Justus Baron, Yann Ménière (chiefeconomist@epo.org) and Tim Pohlmann

International Journal of Industrial Organization, 2014, vol. 36, issue C, 22-35

Abstract: The development of formal ICT standards is a challenging form of collaborative innovation, combining consensus decision making and R&D rivalry. To supplement this formal standard setting process, it has thus become frequent that part of the involved firms creates ad hoc consortia to better align positions on a common technology roadmap. This paper aims to assess whether such consortia can effectively mitigate R&D coordination failure through enhanced cooperation. We first develop a theoretical model showing that depending on the nature of firms' incentives to contribute proprietary technology, different types of R&D coordination failure – namely a Public Good or Rent Seeking problem – may occur in equilibrium. Using a large panel of standards, we then confirm empirically the prediction that consortia have different effects on innovation under a Public Good or Rent Seeking regime. Overall, we observe an increase in innovation after a firm joined a consortium. However, this effect is significantly weakened or even reversed for standards characterized by a strong Rent Seeking regime.

Keywords: Patent; Essential patent; Standard; ICT; Consortia; Innovation (search for similar items in EconPapers)
JEL-codes: L17 L24 O3 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (25)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:indorg:v:36:y:2014:i:c:p:22-35

DOI: 10.1016/j.ijindorg.2014.05.004

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