Author(s)
Raymond Nimmer
Source
Working Paper, 2009
Summary
This paper asks how setting standards affects competition.
Policy Relevance
Setting a standard can hinder competition and cause antitrust problems. Waiting for markets to select the best technology before setting a standard works best.
Main Points
- Technical standards describe techniques firms must use to build products that work together. Technology becomes standard through selection by a standards-setting organization (SSO), or simply by being widely used (de facto standard).
- Each competing firm might urge the SSO to adopt technologies that will benefit that firm. Lobbying an SSO is not protected free speech (the Noer-Pennington doctrine).
- To avoid antitrust problems, SSOs should avoid choices that exclude competitors. In a competition between technologies, SSOs should wait for one to prevail in the market.
- The XML standards debate involved competition between open source and proprietary technology. The SSO should retreat, confining itself to describing any consensus.