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

Abstract

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

Spulber, Daniel F., Standard Setting Organizations and Standard Essential Patents: Voting and Markets (July 1, 2017). Northwestern Law & Econ Research Paper No. 16-21, Available at SSRN: https://ssrn.com/abstract=2865763 or http://dx.doi.org/10.2139/ssrn.2865763

Daniel F. Spulber (Contact Author)

Northwestern University - Kellogg School of Management ( email )

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