Setting Compatibility Standards: Cooperation or Collusion?

Carl Shapiro, University of California at Berkeley

1/01/2005
(Original Publish Date: 6/8/2000)

This paper describes the process by which firms cooperate to establish product compatibility and interface standards, and studies the impact such standards have on market competition. Special emphasis is given to the treatment of intellectual property rights in the standard-setting context. Based on this economic analysis, the paper offers some general suggestions for the proper antitrust treatment of cooperation to set standards, including the use of cross-licenses and patent pools to promote new product standards. By and large, U.S. antitrust law has not stood in the way of beneficial standard setting or cross-licensing.