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Co-Opetition and Prelaunch in Standard-Setting for Developing Technologies

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  • Tobias Kretschmer
  • Katrin Muehlfeld

Abstract

Firms faced with the decision of whether to standardize or not prior to introducing a new network technology face a tradeoff: Compatibility improves the technology's chances of consumer acceptance, but it also means having to share the resulting profits with other sponsors of the standard. In this paper, we show that even prior to market introduction of a new technology, the timing of decisions is important and that firms have to weigh up the cooperative and competitive elements of pre-market choices. We also show that the option to precommit to a technology before it is fully developed (as has been the case with the Compact Disc) can be profitable for network technologies.

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Paper provided by Centre for Economic Performance, LSE in its series CEP Discussion Papers with number dp0742.

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Date of creation: Aug 2006
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Handle: RePEc:cep:cepdps:dp0742

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Web page: http://cep.lse.ac.uk/_new/publications/series.asp?prog=CEP

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Keywords: Standardization; compact disc; preemption; war-of- attrition;

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