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Inefficient Standard Adoption: Inertia and Momentum Revisited

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  • Matthew T. Clements

Abstract

This article examines the possibility that consumers will adopt an inefficient standard. When there are successive generations of consumers, the current generation will not consider the costs and benefits to past and future generations of adopting a new standard. If a standard is proprietary, the incentives of a firm to induce adoption of the standard generally do not match the social incentives. The divergence is caused by the firm's imperfect ability to appropriate the future surplus generated by the standard. (JEL D62, L1) Copyright 2005, Oxford University Press.

Suggested Citation

  • Matthew T. Clements, 2005. "Inefficient Standard Adoption: Inertia and Momentum Revisited," Economic Inquiry, Western Economic Association International, vol. 43(3), pages 507-518, July.
    • Handle: RePEc:oup:ecinqu:v:43:y:2005:i:3:p:507-518
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    File URL: http://hdl.handle.net/10.1093/ei/cbi034
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    Cited by:

    1. Gretz, Richard T. & Basuroy, Suman, 2013. "Why Quality May Not Always Win: The Impact of Product Generation Life Cycles on Quality and Network Effects in High-tech Markets," Journal of Retailing, Elsevier, vol. 89(3), pages 281-300.
    2. Kerstan, Sven & Kretschmer, Tobias & Muehlfeld, Katrin, 2012. "The dynamics of pre-market standardization," Information Economics and Policy, Elsevier, vol. 24(2), pages 105-119.
    3. Justus Baron & Daniel F. Spulber, 2018. "Technology Standards and Standard Setting Organizations: Introduction to the Searle Center Database," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 27(3), pages 462-503, September.
    4. Gretz, Richard T., 2010. "Hardware quality vs. network size in the home video game industry," Journal of Economic Behavior & Organization, Elsevier, vol. 76(2), pages 168-183, November.

    More about this item

    JEL classification:

    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance

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