A PYMNTS Company

The Logic and Limits of Ex Ante Competition in a Standard-Setting Environment

 |  April 18, 2007

Damien Geradin, Anne Layne-Farrar, Apr 19, 2007

Some scholars have questioned the process by which cooperative standards are typically set, worrying about the potential for anticompetitive market power to come hand in hand with pro-competitive interoperability. To combat the perceived problems of ex post opportunism, the suggested solutions have focused on promoting procedures to facilitate ex ante competition. Since standards are generally desirable and competition often exists beforehand, many have argued that we need only formalize the ex ante competitive status quo to avoid any ex post market power trouble. Options proposed in the literature include ex ante auctions to be held during the standard definition phase or binding ex ante licensing commitments made before any vote on technologies occurs. We evaluate the various policy changes suggested with a particular eye to their unintended consequences and costs. Certainly the ex ante proposals would hold some appeal, if ex ante competition generally did not exist in their absence, but we find that they are problematic in important ways. We argue that not only are they not needed, they would tend to create more harm than good if implemented.Registered users can read the complete article by clicking on the link in the column on the left.

Links to Full Content