Should Competition Policy Favor Compatibility?

Joseph Farrell, Professor of Economics, University of California, Berkeley.

3/14/2008
(Original Publish Date: 5/1/2004)

A widespread “pro-standards view” holds that compatibility standards and modularity are beneficial but are under-supplied by imperfect markets. The author stresses that this view is not unambiguously proven by economic logic, but tentatively concludes that it is more right than wrong, especially where it affects horizontal competition.