Standards Migration and Peripheral Competition

The impact of competition from peripheral firms on the standards migration efforts by integrated systems firms with de facto standards control is investigated. When systems firms try to migrate their customers to a new standard, they can lose some control over their installed base because they are constrained in their product offerings. Peripherals firms do not face such constraints. Their product offerings allow the emergence of hybrid systems which systems firms are unwilling to match. Improved peripherals from independent firms make these hybrid systems possible. Such hybrid systems lengthen the economic life of the products that make up the existing standard. Historical and empirical evidence from the mainframe computer industry in the 1960s and 1970s illustrates the competition from peripheral firms and their impact on IBM's standards migration efforts. IBM pursued the establishment of a new de facto standard, while independent disk drive manufacturers supplied peripherals that enabled hybrid systems. For the computer mainframe industry, it was shown that those hybrid systems increased the economic life of IBM's older computers, although IBM was able to migrate its customers to the new standard in this case.     

The Effects of Emissions Standards on Industry

Industrialists often claim that, by rendering firms unprofitable and hence forcing them out of business, stricter emissions standards reduce the industry output and competition. This paper considers situations where firms' pollution reduction increases the industry demand, but, because of inability to coordinate their emissions reductions, and thus free riding problem, they are unable to act in their own collective interest. For such situations, the paper studies the effects of emissions standards on the equilibrium in an oligopoly market. It shows conditions under which a stricter standard leads to a larger number of firms in the industry, a greater industry output, and a lower total pollution in the long run.     

Market design for standardization problems with agent-based social simulation

This paper provides a computational market model with technological competitions among standards and presents simulations of various scenarios concerning standardization problems. The market model has three features: (1) economic entities such as consumers and firms are regarded as autonomous agents; (2) micro interactions among consumer agents or firm agents have essential mechanisms interpretable in real markets; and (3) consumers’ preferences and firms’ technologies co-affect their evolutionary behavior. In recent years, consumers have experienced various inconveniences from de facto competition based on a market mechanism. Standardization communities or committees such as the International Organization for Standardization (ISO) and the International Electrotechnical Commission (IEC) need to design a compatible standard or a de jure standard in a market. However, it is difficult for market designers to decide a method or timing for the standardization. Here, by introducing a novel technique used in agent-based social simulation (ABSS), which we call “scenario analysis,” we aim to support such decision making. Scenario analysis provides the possible market changes that can occur following implementation of a design policy under a specific market situation and the market mechanisms that generate these market changes.     

Standardization Process of Systems Technologies: Creating a Balance between Competition and Cooperation

Many firms are experimenting with how to standardize new technologies. They may use proprietary technologies for their products and services, and let them compete in the market selection. Alternatively, they can cooperate to jointly set a standard and experiment with combinations of market process and cooperation. If firms let the market decide, they can compete with technologies and need not invest time and effort in hammering out a standard. If they do incur the costs of negotiated standardization, they may enable end users to realize the benefits of standards. A hybrid standardization process combines the advantages of both market selection and negotiated decision making. This paper presents a contingency framework to identify conditions that will affect the preferred standardization process for vendors who introduce new technologies. A major contingency that this paper points to is the systemic nature of technologies in information and communication technology industries. The more systemic the technology is (in a way to be clarified), the less likely that firms will establish a hybrid standardization process. One advantage of decomposing technology systems in smaller components (modules) is that this approach enables firms to combine market selection with negotiated selection of standards.     

混合产品提供前后知识缺口识别与补救研究

由于供需双方知识分布不均衡和信息不对称，容易产生知识缺口。基于此，从供需双方知识交互视角，解析基于知识的混合产品提供过程，厘清过程中供需知识缺口形成原因及类型，并结合海尔案例提出补救策略。结果表明：由于客户知识模糊性、企业对客户隐性知识转化的有限性以及企业内部对客户知识处理的异步性，形成了混合产品提供前的知识缺口，制约了混合产品方案设计与服务衍生质量，进而影响混合产品匹配；又由于客户对混合产品理解的局限性、企业知识输送的抽象性以及企业出于盈利与保护的知识封锁行为，使得混合产品知识不易为客户掌握，形成了混合产品提供后的知识缺口，限制了客户利用混合产品解决自身问题的能力。     

Consumer myopia, standardization and aftermarket monopolization

In this paper, I show that the standard Bertrand competition argument does not apply when firms compete for myopic consumers who optimize period-by-period. I develop the model in the context of aftermarket. With overlapping-generations of consumers, simultaneous product offerings in the primary market and aftermarket establishes a price floor for the primary good. This constraint prevents aftermarket rents from being dissipated by the primary market competition. Duopoly firms earn positive profits despite price competition with undifferentiated products. Nonetheless, government interventions to reinforce aftermarket competition such as a standardization requirement may lead to the partial collapse of the primary market.     

同质化竞争下集群企业旧标准锁定与新标准采纳研究

从企业标准到产业集群标准是实现技术标准推广和扩散的关键一步,集群企业间同质化竞争对集群企业的新技术标准采纳有何影响十分值得研究。在考虑旧技术标准网络外部性、新技术标准优越性、新标准许可费、集群企业兼容策略的基础上,分析了产业集群内同质化竞争对企业采纳新技术标准意愿的影响。通过数理模型和实证分析发现：在不同情景下,集群企业间的同质化竞争对新技术标准采纳存在截然相反的影响,但总体来说集群企业间的同质化竞争降低了新技术标准采纳意愿;除此之外,集群企业间竞争还作为调节变量,调节了旧技术标准网络外部性、新技术标准优越性、新技术标准许可费与新技术标准采纳意愿之间的关系。     

Import competition and firm refocusing

Abstract Recent theoretical work predicts a new margin of firm adjustment to trade liberalization; that is, multi‐product firms alter their product mix to focus on their core competencies in response to trade liberalization. Using detailed product data from U.S. public firms, I find strong empirical support for this prediction. Specifically, import competition leads multi‐product firms to drop peripheral products to refocus on core production. The weaker the linkages that a peripheral product shares with the core (as measured by the extent of joint sales, joint procurement, joint production, and joint sectorship), the more likely the peripheral product is to be divested in response to import competition.     

Product line pricing in a vertically differentiated oligopoly

Abstract This paper examines the joint pricing decision of products in a firm’s product line. When products are distinguished by a vertical characteristic, those with higher values of that characteristic will command higher prices. We investigate whether, holding the value of the characteristic constant, there is an additional price premium for products on the industry and/or the firm frontier, that is, for the products with the highest value of the characteristic in the market or in a firm’s product line. We also investigate the existence of price premia for lower‐ranked products and other product line pricing questions. Using personal computer price data, we show that prices decline with the distance from the industry and firm frontiers, even after holding absolute quality constant. We find evidence that consumer tastes for brands is stronger for the consumers of frontier products (and thus competition between firms weaker in the top end of the market). There is also evidence that a product’s price is higher if a firm offers products with the immediately faster and immediately slower computer chip (holding the total number of a firm’s offerings constant), possibly as an attempt to reduce cannibalization. Finally, a product’s price declines with the time it is offered by a firm, suggesting intertemporal price discrimination.     

Licensing technology to shape standards: Examining the influence of the industry context

Technology standards refer to particular technological solutions, which emerge as the accepted approach to fulfill a particular function. In light of the growing importance of technology standards and network externalities, industrial firms may not only adopt emerging standards, but they can actively shape the standardization processes based on their forecasting activities. One important means to influence standard setting towards a firm's own technology is to foster the technology's adoption by actively licensing it to other organizations. Thus, industrial firms may license technology in order to enhance their future new product performance based on a standard related to their technology. To shed light on these dynamics of standardization processes, we draw on contingency theory and conceptually examine the role of licensing in the emergence of technology standards. We further use new data from two surveys of 79 industrial firms with a three-year lag to analyze how environmental contingency factors related to appropriability, i.e., patent protection and technological turbulence, moderate the relationship between licensing to shape technology standards and a firm's subsequent innovation performance. The data provide strong support for the importance of shaping standards by licensing technology, and the findings have important implications for research into standards, licensing, and appropriability.     

A real options reasoning approach to hybrid vehicle investments

Long term increases of petrol prices and the threat of a global climate change have created in the automotive industry a new competitive environment based on the development of more sustainable technologies. Using the real option reasoning lens we provide a theoretical framework to better account for the technological and market uncertainties and irreversibilities that impact the investment and innovation decisions of automotive firms supporting the development of more sustainable vehicle technologies. We investigate the case of hybrid vehicles in a transitional perspective by insisting on their potential to influence the dynamic shaping of investment decisions of firms in the car industry. We consider the hybridization strategy as intra-project and inter-project compound growth options to manage the flexibilities and irreversibilities of investment decisions during the transition process. We provide four different-sometimes conflicting-strategic rationales structuring the investment efforts of firms in hybrid vehicles and illustrate them with numerous examples from the automotive industry.     

Exposure to FDI and new plant survival: evidence in Canada

Abstract This paper examines the effects of FDI on indigenous new plants’ survival, through intra‐ and inter‐industry economic linkages. It includes all manufacturing plants born to indigenous firms from 1973 to 1997 in Canada. The study finds that indigenous plants tend to have shorter lives (more deaths) due to competition with FDI affiliates operating in the same industry, but they benefit from FDI affiliates operating both in downstream industries as customers and in upstream industries as suppliers. The positive inter‐industry effects of FDI outweigh the negative intra‐industry effects, resulting in a net positive impact of FDI on the durations of indigeneous plants.     

A DYNAMIC ANALYSIS OF COOPERATIVE RESEARCH IN THE SEMICONDUCTOR INDUSTRY*

In this article I construct a dynamic oligopoly model of research joint ventures (RJVs) where firms, investing to improve product quality, fully share the rewards of research success. RJVs benefit firms by eliminating duplicative research efforts, but firms also give up the possibility of becoming a solo innovator. Consumers benefit from lower prices, but may have to wait longer for new products to arrive. I show that RJVs are welfare enhancing by quantitatively evaluating these trade‐offs with data from the semiconductor industry. I also analyze how changes in product market competition affect research cooperation.     

溢出效应、价格规制与企业投资激励——以电信产业“共建共享”政策为视角

电信运营商不愿参与"共建共享"缘于这项政策可能会降低产品差异化程度,加剧竞争。文章基于三阶段轮辐模型,从福利经济学角度考察无规制和存在接入价格规制情形下的最优投资水平发现,如果企业为争夺老用户竞争,溢出效应不仅会降低投资厂商与接入厂商之间的差异化,而且会导致厂商投资更加偏离社会最优投资水平;如果企业定位于拓展新用户,溢出效应反而可以提高全行业的经济效益,同时使得更多消费者享受到电信服务。但是,为消除市场失灵带来的投资偏离而采取价格规制政策会进一步扭曲厂商投资的激励。基于此,文章认为在电信用户迅速增长的今天,政府应出台更多"共建共享"的配套政策促进企业投资。     

Permit Trading and Credit Trading: A Comparison of Cap-Based and Rate-Based Emissions Trading Under Perfect and Imperfect Competition

This paper compares emissions trading based on a cap on total emissions (permit trading) and on relative standards per unit of output (credit trading). Two types of market structure are considered: perfect competition and Cournot oligopoly. We find that output, abatement costs and the number of firms are higher under credit trading. Allowing trade between permit-trading and credit-trading sectors may increase welfare. With perfect competition, permit trading always leads to higher welfare than credit trading. With imperfect competition, credit trading may outperform permit trading. Environmental policy can lead to exit, but also to entry of firms. Entry and exit have a profound impact on the performance of the schemes, especially under imperfect competition. We find that it may be impossible to implement certain levels of total industry emissions. Under credit trading several levels of the relative standard can achieve the same total level of emissions.     

Market Integration,Choice of Technology,and Welfare

This paper develops an international trade model where firms in a duopoly may diversify their technologies for strategic reasons. The firms face the same set of technologies given by a tradeoff between marginal costs and fixed costs, but depending on trade costs firms may choose different technologies. Market integration may induce a technological restructuring where firms either diversify their technologies or switch to a homogeneous technology. In general, market integration improves welfare. However, a small decrease of trade costs which induces a switch from heterogeneous technologies to a homogeneous technology may locally reduce global welfare. The model also shows that productivity differences lead to intra‐industry firm heterogeneity in size and exports similar to the “new–new” trade models with monopolistic competition.     

Technological Choice In Voluntary Standards Committees: An Empirical Analysis

Vendors frequently compete to have their technology adopted as part of a voluntary consensus standard. In this paper we report the results of an empirical study of the factors that influence the choice of technologies in voluntary technical standards committees.

Participation in standards committees is viewed as an aspect of the product development process of corporations involved in markets where network externalities are present. The factors hypothesized to affect the technology decision are: the market power of the coalition sponsoring the technology, the installed base of the products containing the technology, the size of the firms that make up the coalition, the promotional activities of the sponsors (such as technical contributions submitted), the perceived superiority of the technology, and the political skills of the coalition.

These hypotheses were tested by collecting data concerning specific technical decisions that were made in several standards committees in the area of computer communications hardware. Two sided t-tests were used to test the hypotheses, and logit regression was used to infer the importance of each factor in predicting adoption or non-adoption of the technology. A factor analysis was also performed to gain further insight into the data.

The results suggest that the size of the firms in the coalition supporting a technology and the extent to which they support their position through written contributions are significant determinants of technological choice in the standards decisions studied. The market share of the firms in the coalition was found to be significant only for the buyers of compatible products, i.e., the monopsony power was significant, not the monopoly power. In addition, the technologies whose sponsors weighted market factors more highly than technical factors were more likely to be adopted in the standards decision studied. The proponents of both the adopted and non-adopted technologies were found to have equal belief in the overall technical superiority of their technical alternative, even after the decision. The installed base of a technology and process skills were not found to be significant predictors of the committee outcome.     

Product customization

The advent of the Internet has revolutionized the way companies advertise, develop and distribute products. Firms can now customize their advertising messages and products to the particular characteristics and needs of customers. Customers themselves can create their own products. We investigate investments by firms in product-customization capabilities within a duopoly model of horizontal product differentiation. We find that (i) if brand name effects are not too strong, one firm emerges as a leader in product customization—firms make asymmetric investments in product-customization technologies in order to reduce price competition, (ii) if brand name effects are strong, both firms make extensive investments in product customization, and (iii) the possibility of product customization can raise industry profits if brand names are weak, but not when they are strong.     

Technological Evolution of Personal Computers and Market Implications

The aim of this article is to highlight how technological innovation in the personal computer industry is modifying both market structure and relationships between manufacturers and customers. To measure technological change a model based on the technical approach has been used. This model considers the product as a set of techno-economic characteristics. About 650 models on the personal computer market between 1988 and 1994 were considered. Two main results emerge from this article: technical innovation has reduced the distance between the conservative user and the innovative user insofar as the former can nowadays purchase, at little extra cost, high performance personal computers; whereas in the past, the personal computer was considered a machine for processing information and working on texts, today it has become an indispensable tool for a variety of multimedia services, and consequently, technological innovation has pushed firms out of the personal computer product-selling phase into a service-offering phase.     

The co-evolution of technology and methods of standard setting: the case of the mobile phone industry

This paper applies the concept of co-evolution to technology, institutions, and industry structure in the mobile phone industry with a focus on technology and the institution/method of standard setting. The paper shows how changes in technology have caused the method of standard setting to come full circle. New switching technologies, in particular electronic switching, enabled a change from integral to modular problem solving and thus a change from quasi-vertical integration to open standard setting in the wireline telecommunications industry in the late 1970s and later in the mobile phone industry. Growth in those mobile phone markets that initially implemented an open standard setting process encouraged other countries to adopt similar types of standard setting where government agencies and firms were the mechanisms for this transmission of open standard setting methods. However, the latest technological change, the mobile Internet, requires integral problem solving and this has caused quasi-vertical integration to return in the form of service providers determining the mobile Internet standards and the specifications for the phones that support their mobile Internet services. A new set of firms is transmitting these methods of standard setting to the rest of the world.