IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this paper

Technological Standards, Innovation, and Essential Facilities: Toward a Schumpeterian Post-Chicago Approach

Listed author(s):
  • Richard N. Langlois

    (University of Connecticut)

In this essay, I attempt to take seriously Schumpeter's perspective on competition as fundamentally about innovation. Drawing on literatures that concern themselves centrally with the patterns and processes of technological change, I focus on a set of issues very much on the present-day agenda: antitrust policy toward network industries in which technological standards are important. As both scholars and legal cases have suggested, one might logically view a set of standards as an "essential facility" - a technological bottleneck - for those who wish to connect to the network.. I attempt to define the limits of the standard price-theoretic account for understanding the problem of essential facilities and offer instead a perspective drawing on the theory property rights in a regime of innovation. Contrary to what is suggested by traditional economic analysis, I argue that, as a logical matter, refusals to deal by essential-facility monopolists are not always equivalent to the exercise of existing monopoly power through price, and there are good theoretical reasons for an essential facility doctrine to concern itself with refusals to deal even when it fails to touch other exercises of market power by a legally acquired monopoly. I introduce the concept of the scope of an essential facility, understood in analogy with a similar concept in the economics of patents, and suggest that the degree to which antitrust policy should concern itself with the ownership or control of a technical standard ought to be proportional to the scope of the standard. At the same time, however, a Schumpeterian perspective reminds us that, in a world of dynamic technological competition, even possession of a standard with wide scope may afford only temporary protection, and the winds of Schumpeterian creative destruction may be a better bulwark against monopoly than the cumbersome and interest-laden processes of antitrust law and policy. Nonetheless, the notion of the scope of a standard may prove useful in many cases, including those involving regulated (or formerly regulated) industries or involving tradeoffs in intellectual property rights.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL:
File Function: Full text
Download Restriction: no

Paper provided by University of Connecticut, Department of Economics in its series Working papers with number 1999-07.

in new window

Length: 57 pages
Date of creation: Dec 1999
Handle: RePEc:uct:uconnp:1999-07
Contact details of provider: Postal:
University of Connecticut 365 Fairfield Way, Unit 1063 Storrs, CT 06269-1063

Phone: (860) 486-4889
Fax: (860) 486-4463
Web page:

More information through EDIRC

No references listed on IDEAS
You can help add them by filling out this form.

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:uct:uconnp:1999-07. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mark McConnel)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.