Tech Report Number
1994-015
Abstract
We examine anticipatory product standards intended to improve the strategic position of firms in an international patent race where firms do R & D to develop products that are close substitutes. The effects of a standard are shown to depend on the way the standard is specified, which firm develops which product, and on the order in which products are discovered. Simple standards are, in general, time inconsistent because of consumer losses that occur when products ruled out by the standard are discovered before the product set as the standard. A state-contingent standard is shown to be time consistent when compulsory licensing by the foreign firm is introduced.
Keywords
Competition, Trade
Date of this Version
1-1-1994
COinS