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Identifier to cite or link to this item: https://hdl.handle.net/10086/25587

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Title
Standards and Innovation: Technology vs. Installed Base
Creator
Creator Name
Aoki, Reiko Aoki, Reiko
Affiliation
Affiliation Name
Hitotsubashi University
Creator Name
Arai, Yasuhiro Arai, Yasuhiro
Affiliation
Affiliation Name
Aomori Public College
Editor
Contributor Name
一橋大学経済研究所世代間問題研究機構 = Center for Intergenerational Studies, Institute of Economic Research, Hitotsubashi University
Key Word
standards
innovation
installed base
Abstract
We present a framework to examine how a standard evolves when a standard consortium or a firm (incumbent) innovates either to improve the standard or to strengthen installed base which increases switching cost. Both investments make it more difficult for another firm (entrant) to introduce a standard, also by investing in technology improvement. We show that incumbent's strategy will differ according to if the technology is in infancy or it has matured. The incumbent will deter entry when the technology is in infancy and return from investment is high. In this case ability to raise switching cost is important since entrant also has low cost. If the technology is mature and return to investment is low, then incumbent will choose to allow entry and there is co-existence of two standards. Replacement of standard by the entrant never occurs in equilibrium.
Publisher
Institute of Economic Research, Hitotsubashi University
Issued Date
2013-03
Language
English(eng)
Resource Type
technical report
Version Type
VoR
Is Part OfRelation -
Related Title
CIS Discussion paper series ; No. 601
Relation
Related Identifier
URI
  http://cis.ier.hit-u.ac.jp/English/index.html
Number of Pages
36
Appears in Collections
CIS Discussion paper series
URL
https://hdl.handle.net/10086/25587