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Standards, consortia, and innovation

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  • Baron, Justus
  • Ménière, Yann
  • Pohlmann, Tim

Abstract

The development of formal ICT standards is a challenging form of collaborative innovation, combining consensus decision making and R&D rivalry. To supplement this formal standard setting process, it has thus become frequent that part of the involved firms creates ad hoc consortia to better align positions on a common technology roadmap. This paper aims to assess whether such consortia can effectively mitigate R&D coordination failure through enhanced cooperation. We first develop a theoretical model showing that depending on the nature of firms' incentives to contribute proprietary technology, different types of R&D coordination failure – namely a Public Good or Rent Seeking problem – may occur in equilibrium. Using a large panel of standards, we then confirm empirically the prediction that consortia have different effects on innovation under a Public Good or Rent Seeking regime. Overall, we observe an increase in innovation after a firm joined a consortium. However, this effect is significantly weakened or even reversed for standards characterized by a strong Rent Seeking regime.

Suggested Citation

  • Baron, Justus & Ménière, Yann & Pohlmann, Tim, 2014. "Standards, consortia, and innovation," International Journal of Industrial Organization, Elsevier, vol. 36(C), pages 22-35.
  • Handle: RePEc:eee:indorg:v:36:y:2014:i:c:p:22-35
    DOI: 10.1016/j.ijindorg.2014.05.004
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    References listed on IDEAS

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    Cited by:

    1. Chryssoula Pentheroudakis & Justus A. Baron, 2016. "Licensing Terms of Standard Essential Patents: A Comprehensive Analysis of Cases," JRC Working Papers JRC104068, Joint Research Centre (Seville site).
    2. Tim POHLMANN, 2014. "The Evolution of ICT Standards Consortia," Communications & Strategies, IDATE, Com&Strat dept., vol. 1(95), pages 17-40, 3rd quart.
    3. Kang, Byeongwoo & Bekkers, Rudi, 2015. "Just-in-time patents and the development of standards," Research Policy, Elsevier, vol. 44(10), pages 1948-1961.
    4. Baron, Justus & Pohlmann, Tim & Blind, Knut, 2016. "Essential patents and standard dynamics," Research Policy, Elsevier, vol. 45(9), pages 1762-1773.
    5. Yann Ménière, 2015. "Fair, Reasonable and Non-discriminatory (FRAND) Licensing Terms. Research Analysis of a Controversial Concept," Post-Print hal-01261021, HAL.
    6. Stefano Comino & Fabio M. Manenti & NIkolaus Thumm, 2017. "The Role of Patents in Information and Communication Technologies (ICTs). A survey of the Literature," "Marco Fanno" Working Papers 0212, Dipartimento di Scienze Economiche "Marco Fanno".

    More about this item

    Keywords

    Patent; Essential patent; Standard; ICT; Consortia; Innovation;

    JEL classification:

    • L17 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Open Source Products and Markets
    • L24 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Contracting Out; Joint Ventures
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

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