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CEP discussion paper
Co-Opetition and Prelaunch in Standard-Setting for Developing Technologies
Tobias Kretschmer and Katrin Muehlfeld
August 2006
Paper No' CEPDP0742:
Full Paper (pdf)

JEL Classification: L63; O32

Tags: standardization; compact disc; preemption; war-of- attrition

Firms faced with the decision of whether to standardize or not prior to introducing a new network technology face a tradeoff: Compatibility improves the technology’s chances of consumer acceptance, but it also means having to share the resulting profits with other sponsors of the standard. In this paper, we show that even prior to market introduction of a new technology, the timing of decisions is important and that firms have to weigh up the cooperative and competitive elements of pre-market choices. We also show that the option to precommit to a technology before it is fully developed (as has been the case with the Compact Disc) can be profitable for network technologies.