Standard Setting Organizations and Standard Essential Patents: Voting and Markets
51 Pages Posted: 8 Nov 2016 Last revised: 16 Dec 2017
Date Written: July 1, 2017
The analysis provides conditions under which Standard Setting Organizations (SSOs) choose efficient technology standards. I introduce a two-stage game with both voting and market competition. In equilibrium, standards and market outcomes are efficient even with market power from scarce capacity and Standard Essential Patents (SEPs). I show that a drastic innovation with SEPs generates greater social welfare than a less efficient standard without SEPs. A key finding is that voting power and market power have counterbalancing effects. The discussion helps explain empirical observation of differences in SSO voting rules, intellectual property (IP) rules, membership, and alliances.
Keywords: Standards, Voting, Competition, Technology, Patents, Intellectual Property, Standard Setting Organizations, Standard Essential Patents
JEL Classification: D01, D02, D70, K, L, O3
Suggested Citation: Suggested Citation