Standardization, Compatibility, and Innovation
AbstractThere are often benefits to consumers and to firms from standardization of a product. We examine whether these standardization benefits can "trap" an industry in an obsolete or inferior standard when there is a better alternative available. With complete information and identical preferences among firms the answer is no; but when information is incomplete this "excess inertia" can occur. We also discuss the extent to which the problem can be overcome by communication.
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Bibliographic InfoArticle provided by The RAND Corporation in its journal RAND Journal of Economics.
Volume (Year): 16 (1985)
Issue (Month): 1 (Spring)
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Web page: http://www.rje.org
Other versions of this item:
- Joseph Farrell & Garth Saloner, 1984. "Standardization, Compatibility and Innovation," Working papers, Massachusetts Institute of Technology (MIT), Department of Economics 345, Massachusetts Institute of Technology (MIT), Department of Economics.
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