Membership, Governance, and Lobbying in Standard-Setting Organizations
32 Pages Posted: 19 Dec 2018 Last revised: 22 Feb 2019
Date Written: December 19, 2018
Standard-setting organizations (SSOs) are collectively self-governed industry associations, formed by innovators and implementers. They are the main organizational form to agree on and manage technical standards, which have significant positive welfare effects. SSO self-governance avoids monopolization and increases a standard's acceptance but also introduces specific issues. Constructing a model, we study the incentives of heterogeneous innovators and implementers to join a SSO, which is endogenously formed. We also studythe effect of SSO governance on membership incentives and on members' lobbying efforts to get their technologies included in the standard. We show that, depending on parameter realizations, one of four equilibrium types arises uniquely. The results can reconcile existing evidence, especially that many SSO member firms are small. We create intuition regarding firms' trade-off, which depends on the beliefs of active members to get their technologies included in the standard and the intensity of knowledge spillovers.
Keywords: D71, D72, L15, O31
JEL Classification: Standard-setting organizations, standardization, associations, membership, governance, lobbying.
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