Standard-Creating Coalitions: Open Vs. Proprietary Standards

Ruslan Lukach, University of Antwerp - Faculty of Applied Economics, Peter M. Kort, Tilburg University - Department of Econometrics & Operations Research, and Joseph Plasmans, University of Antwerp - Department of Economics

1/06/2008
(Original Publish Date: 2000)

This paper studies the impact of entrepreneurial decisions regarding standard creation in an oligopolistic market with cooperative R&D investments. Our game-theoretic analysis shows that if standards are open and only multi-standard equilibria are allowed, it is impossible to attain a stable multi-standard equilibrium. However, if standards are proprietary, firms can reach two stable multi-standard equilibria. These stable equilibria imply the creation of two proprietary standards: symmetric in one equilibrium and asymmetric in the other, where the asymmetric equilibrium only exists when the innovating firms are strongly efficient in R&D.