Evolving technologies and standards regulation

• Autores: Luís Cabral, David Salant
• Localización: International journal of industrial organization, ISSN 0167-7187, Vol. 36, Nº. 1, 2014, págs. 48-56
• Idioma: inglés
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• Resumen

  • 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.