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Competing through cooperation: Standard setting in wireless telecommunications

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  • Leiponen, Aija
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    Abstract

    This study examines cooperative standard-setting in wireless telecommunications. Focusing on the competition among firms to influence formal standardization, the roles of standard-setting committees, private alliances, and technical consortia are highlighted. The empirical context is Third Generation Partnership Project (3GPP), an international standards development organization. Panel data analyses suggest that participation in external technical consortia significantly enhance firms’ contributions to the development of new specifications in 3GPP committees. Then, once a firm has become a central player in technical committees, it can further influence the standard-setting outcome through change requests to ongoing specifications. External alliances with fellow 3GPP members may also improve change request success. These results suggest that if firms in network technological industries want to influence the evolution of their industry, they should identify both formal standard-setting committees and external cooperative arrangements in which they can discuss, negotiate, and align positions on technical features with their peers. For policymakers, these results suggest that it is important to ensure that technical consortia remain open for all industry actors and that membership fees do not become prohibitive to small and resource-constraint players.

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    Bibliographic Info

    Paper provided by The Research Institute of the Finnish Economy in its series Discussion Papers with number 1056.

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    Length: 30 pages
    Date of creation: 2006
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    Handle: RePEc:rif:dpaper:1056

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    Keywords: Standard setting; technology strategy; inter-firm networks;

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    1. Joseph Farrell and Garth Saloner., 1988. "Coordination through Committees and Markets," Economics Working Papers, University of California at Berkeley 8864, University of California at Berkeley.
    2. Joseph Farrell & Garth Saloner, 1984. "Standardization, Compatibility and Innovation," Working papers 345, Massachusetts Institute of Technology (MIT), Department of Economics.
    3. Bekkers,Rudi & Duysters,Geert & Verspagen,Bart, 2000. "Intellectual Property Rights, Strategic Technology Agreements and Market Structure, The Case of GSM," Research Memorandum 029, Maastricht University, Maastricht Economic Research Institute on Innovation and Technology (MERIT).
    4. Marc Rysman & Tim Simcoe, 2006. "Patents and Performance of Voluntary Standard Setting Organizations," Boston University - Department of Economics - Working Papers Series WP2006-031, Boston University - Department of Economics.
    5. Lucio Fuentelsaz & Jaime Gómez, . "Multipoint Competition, Mutual Forbearance and Entry into Geographic Markets," Studies on the Spanish Economy 127, FEDEA.
    6. Emmanuel Farhi & Josh Lerner & Jean Tirole, 2005. "Certifying New Technologies," Journal of the European Economic Association, MIT Press, MIT Press, vol. 3(2-3), pages 734-744, 04/05.
    7. Funk, Jeffrey L. & Methe, David T., 2001. "Market- and committee-based mechanisms in the creation and diffusion of global industry standards: the case of mobile communication," Research Policy, Elsevier, vol. 30(4), pages 589-610, April.
    8. Josh Lerner & Jean Tirole, 2006. "A Model of Forum Shopping," American Economic Review, American Economic Association, vol. 96(4), pages 1091-1113, September.
    9. Joseph Farrell & Hunter K. Monroe & Garth Saloner, 1998. "The Vertical Organization of Industry: Systems Competition versus Component Competition," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 7(2), pages 143-182, 06.
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