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Adoption of Standards Under Uncertainty

Author

Listed:
  • Michael Ostrovsky

    (Harvard University)

  • Michael Schwarz

    (Harvard University and Stanford University)

Abstract

The presence of noise in compliance times may have a critical impact on the selection of new technological standards. A technically superior standard is not necessarily viable because an arbitrarily small amount of noise may render coordination on that standard impossible. We introduce the concept of a firm's "support ratio," defined as a function that depends only on characteristics of that firm. We show that for sufficiently patient firms, the viability of a standard does not depend on the distribution of noise in compliance times. The criterion for the viability of a standard is that the sum of support ratios of all firms be smaller than one.

Suggested Citation

  • Michael Ostrovsky & Michael Schwarz, 2005. "Adoption of Standards Under Uncertainty," RAND Journal of Economics, The RAND Corporation, vol. 36(4), pages 816-832, Winter.
    • Handle: RePEc:rje:randje:v:36:y:2005:4:p:816-832
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    Cited by:

    1. Ochs, Jack & Park, In-Uck, 2010. "Overcoming the coordination problem: Dynamic formation of networks," Journal of Economic Theory, Elsevier, vol. 145(2), pages 689-720, March.
    2. Martin A. Lariviere & Jan A. Van Mieghem, 2004. "Strategically Seeking Service: How Competition Can Generate Poisson Arrivals," Manufacturing & Service Operations Management, INFORMS, vol. 6(1), pages 23-40, January.
    3. Sofia Moroni, 2018. "Games with Private Timing," Working Paper 6400, Department of Economics, University of Pittsburgh.
    4. Gary Biglaiser & Jacques Crémer & André Veiga, 2022. "Should I stay or should I go? Migrating away from an incumbent platform," RAND Journal of Economics, RAND Corporation, vol. 53(3), pages 453-483, September.
    5. , & , P., 2014. "Refinements of Nash equilibrium in potential games," Theoretical Economics, Econometric Society, vol. 9(3), September.
    6. Jack Ochs, 2006. "Dynamic Network Formation," Working Paper 233, Department of Economics, University of Pittsburgh, revised Jan 2006.
    7. Gary Biglaiser & Jacques Crémer, 2020. "The Value of Incumbency When Platforms Face Heterogeneous Customers," Post-Print hal-03049041, HAL.
    8. Min-Hung Tsay, 2012. "Preemption and rent equalization in the adoption of new technology: comment," Economics Bulletin, AccessEcon, vol. 32(2), pages 1680-1686.
    9. Bumin Yenmez, M., 2012. "Dissolving multi-partnerships efficiently," Journal of Mathematical Economics, Elsevier, vol. 48(2), pages 77-82.
    10. Frederik Schmidt, 2008. "Innovation contests with temporary and endogenous monopoly rents," Review of Economic Design, Springer;Society for Economic Design, vol. 12(3), pages 189-208, September.

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