Evolving technologies and standards regulation

Luis Cabral and David Salant

International Journal of Industrial Organization, 2014, vol. 36, issue C, 48-56

Abstract: The EU mandated a single standard for second generation wireless telecommunications, whereas the US allowed several incompatible standards to battle for market share. Motivated by this example, we argue that a single standard leads to a free riding problem, and thus to a significant decrease in marginal incentives for R&D investment. In this context, keeping two separate standards may be a necessary evil to sustain a high level of R&D expenditures. We also provide conditions such that a non-standardization equilibrium is better for consumers and for society as a whole.

Keywords: Standardization; Innovation; Free-riding; Spectrum regulation (search for similar items in EconPapers)
JEL-codes: L13 L51 L52 L96 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (16)

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Working Paper: Evolving Technologies and Standards Regulation (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:indorg:v:36:y:2014:i:c:p:48-56

DOI: 10.1016/j.ijindorg.2013.07.006

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