Adoption of Standards Under Uncertainty
43 Pages Posted: 5 Aug 2003
Date Written: July 2003
Abstract
The presence of noise in compliance times may have a critical impact on the selection of new technological standards. A technically superior standard is not necessarily viable because an arbitrarily small amount of noise may render coordination on that standard impossible. The criterion for the viability of a standard is that the sum of "support ratios" of all players must be smaller than one, where "support ratio" is defined as the ratio of the firm's per-period cost of supporting the standard to the per-period gross benefit that the firm receives after all players comply with the standard.
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