The dynamics of pre-market standardization

Sven Kerstan, Tobias Kretschmer and Katrin Muehlfeld

Information Economics and Policy, 2012, vol. 24, issue 2, 105-119

Abstract: This paper studies an under-explored phenomenon: standardization arising during the technology development stage from the interplay of incentives to compete and cooperate. We identify circumstances in which a firm will prelaunch its technology (i.e., publish detailed technological specifications) and the rival abandons its own technology to support a common standard in a two-stage two-player game with network effects and licensing and a fixed deadline for technological development. We find that failure to standardize predominantly occurs for technologies with very weak or very strong network effects, and for firms with similar technological capabilities. The outcome can depend on what would be perceived by market participants as a simultaneous prelaunch: a prelaunch on the same day, during the same week, or month, and so on, depending on how time is discretized.

Keywords: Standardization; Network effects; Preemption; Standards battle (search for similar items in EconPapers)
JEL-codes: C70 L15 O32 (search for similar items in EconPapers)
Date: 2012
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:iepoli:v:24:y:2012:i:2:p:105-119

DOI: 10.1016/j.infoecopol.2011.11.002

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