Co-opetition in Standard-Setting: The Case of the Compact Disc
Ludwig Maximilian University of Munich - Faculty of Business Administration (Munich School of Management); Centre for Economic Policy Research (CEPR)
Utrecht University - Utrecht University School of Economics; University of Trier - Faculty of Management
NET Institute Working Paper No. 04-14
The success of the CD has (partly) been attributed to the ability of Sony, Philips and Matsushita to cooperate in the run-up to the DAD conference in 1981, where the technological standard was set. We model the situation leading up to the conference in a simple game with technological progress and the possibility of prelaunching a technology. We identify players' tradeoffs between prelaunching (which ends technological progress) and continued development (which involves the risk of being pre-empted). Contrasting outcomes with complete and incomplete information, we find that there appeared to be considerable uncertainty about rivals' technological progress.
Number of Pages in PDF File: 32
Date posted: November 15, 2004