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Identifier to cite or link to this item: https://hdl.handle.net/10086/26486

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Title
Evolution of Standards and Innovation
Creator
Creator Name
Aoki, Reiko Aoki, Reiko
Affiliation
Affiliation Name
Hitotsubashi University
Creator Name
Arai, Yasuhiro Arai, Yasuhiro
Affiliation
Affiliation Name
Kochi University
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
technology
upgrades
standardization
replacement effect
Abstract
We develop a framework to examine how a standard evolves when a standard consortium or firm (incumbent) innovates either to improve the standard or to strengthen the installed base, which increases switching costs. Both investments make it more difficult for another firm (entrant) to introduce a standard by investing in technology improvement. Our analysis shows that that incumbent’s strategy depends on whether the technology is in its infancy or has matured, and that entrants cannot supplant the existing standard. A standard consortium brings dynamic benefits by preventing replacement by an entrant. When the technology is in its infancy, the incumbent deters entry, but when the technology is mature, entry and the coexistence of two standards are tolerated. The dominance of a single standard, even for well-established technologies, suggests that incumbents have market power. Our results also suggest that having superior technology is not enough to enable entrants to supplant an existing standard.
Publisher
Institute of Economic Research, Hitotsubashi University
Issued Date
2014-03
Language
English(eng)
Resource Type
technical report
Version Type
VoR
Is Part OfRelation -
Related Title
CIS Discussion paper series ; No. 619
Relation
Related Identifier
URI
  http://cis.ier.hit-u.ac.jp/English/index.html
Number of Pages
38
Appears in Collections
CIS Discussion paper series
URL
https://hdl.handle.net/10086/26486