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Technology Choice and Coalition Formation in Standards Wars
Author(s) -
Llanes Gastón,
Poblete Joaquín
Publication year - 2020
Publication title -
the journal of industrial economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.93
H-Index - 77
eISSN - 1467-6451
pISSN - 0022-1821
DOI - 10.1111/joie.12207
Subject(s) - ex ante , monopoly , competition (biology) , welfare , economics , process (computing) , consumer welfare , technical standard , industrial organization , business , public economics , microeconomics , market economy , political science , macroeconomics , law , ecology , computer science , biology , operating system
We study the efficiency of the standard‐setting process when standards result from competition between groups of firms sponsoring different technologies. We show that ex ante agreements may decrease welfare in the case of standards wars: Even though industry profits are larger with ex ante agreements, welfare is not necessarily larger, because the interests of firms and society may not be aligned. This result contrasts with the findings of previous works studying de jure monopoly standards. Including adopters in the standard‐setting process may restore the efficiency of ex ante agreements.