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Public R&D as a Standard-Setting Device

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  • Achim Hecker
  • Tobias Kretschmer

Abstract

We propose a simple two-firm model with complementarities and imperfect knowledge about the optimal technology. Firms receive two signals about the technology, a public and a private one. We show that with complementarities public signals can serve as a coordination device between firms, even if the private signal is more precise. Our results point to an important function of standard-setting organizations and public R&D: providing a focal point for firms that might not coordinate otherwise.

Suggested Citation

  • Achim Hecker & Tobias Kretschmer, 2014. "Public R&D as a Standard-Setting Device," Industry and Innovation, Taylor & Francis Journals, vol. 21(7-8), pages 599-615, November.
    • Handle: RePEc:taf:indinn:v:21:y:2014:i:7-8:p:599-615
    DOI: 10.1080/13662716.2015.1011914
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