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Coordination versus differentiation in a standards war: 56K modems
Author(s) -
Augereau Angelique,
Greenstein Shane,
Rysman Marc
Publication year - 2006
Publication title -
the rand journal of economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 3.687
H-Index - 108
eISSN - 1756-2171
pISSN - 0741-6261
DOI - 10.1111/j.1756-2171.2006.tb00062.x
Subject(s) - standardization , competitor analysis , competition (biology) , the internet , process (computing) , commercialization , computer science , service provider , technical standard , telecommunications , business , service (business) , industrial organization , marketing , world wide web , ecology , biology , operating system
56K modems were introduced under two competing incompatible standards. We show the importance of competition between internet service providers in the adoption process. We show that ISPs were less likely to adopt the technology that more competitors adopted. This result is particularly striking given that industry participants expected coordination on one standard or the other. We speculate about the role of ISP differentiation in preventing the market from achieving standardization until a standard setting organization intervened.