Standard-Creating Coalitions: Open vs. Proprietary Standards

42 Pages Posted: 6 Dec 2007

See all articles by Ruslan Lukach

Ruslan Lukach

European Union - European Commission

Peter M. Kort

Tilburg University - Department of Econometrics & Operations Research; Tilburg University - Center for Economic Research (CentER)

Joseph Plasmans

University of Antwerp - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute); Tilburg University

Date Written: November 2007

Abstract

This paper studies the impact of entrepreneurial decisions regarding standard creation in an oligopolistic market with cooperative R&D investments. Our game-theoretic analysis shows that if standards are open and only multi-standard equilibria are allowed, it is impossible to attain a stable multi-standard equilibrium. However, if standards are proprietary, firms can reach two stable multi-standard equilibria. These stable equilibria imply the creation of two proprietary standards: symmetric in one equilibrium and asymmetric in the other, where the asymmetric equilibrium only exists when the innovating firms are strongly efficient in R&D.

Keywords: Standardization, R&D, Coalition Formation, Nash Equilibrium

JEL Classification: C72, D21, O31

Suggested Citation

Lukach, Ruslan and Kort, Peter and Plasmans, Joseph E. J., Standard-Creating Coalitions: Open vs. Proprietary Standards (November 2007). Available at SSRN: https://ssrn.com/abstract=1054021 or http://dx.doi.org/10.2139/ssrn.1054021

Ruslan Lukach (Contact Author)

European Union - European Commission ( email )

Rue de la Loi 200
Brussels, B-1049
Belgium

Peter Kort

Tilburg University - Department of Econometrics & Operations Research ( email )

Tilburg, 5000 LE
Netherlands
+31 13 466 2062 (Phone)
+31 13 466 3072 (Fax)

HOME PAGE: http://center.uvt.nl/staff/kort/

Tilburg University - Center for Economic Research (CentER) ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands
+31 13 466 2062 (Phone)
+31 13 466 3072 (Fax)

Joseph E. J. Plasmans

University of Antwerp - Department of Economics ( email )

Prinsstraat 13
Antwerp, B-2000
Belgium

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Tilburg University

Postbus 90153
Tilburg, DC Noord-Brabant 5000 LE
Netherlands

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