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Market and Committee Based Mechanisms in the Creation and Diffusion of Global Industry Standards: the case of mobile communication By

By Jeffrey L. Funk and David T. Methe


The existing literature on industrial standards almost exclusively focuses on pure market competition; this paper shows how and why both governments and firms have had a strong effect on the creation of global standards in the mobile communication industry through a hybrid system of committees and markets. According to our model, governments can and did influence forecasted and actual installed base for systems in the mobile communications industry through their influence on product demand (e.g., by determining the amount of competition in the market) and the number of and degree of openness in the standards. In particular, the choice of a single standard (by either a large single country or region) dramatically and instantaneously increased the forecast for the standard's domestic installed base thus causing other countries to also adopt the It is widely recognized that the creation of industry standards has a large effect on competition in industries. Once a standard is established, customers can benefit from the reduced market uncertainty and lower costs of the products that are based on the standard. Firms who create the winning standards reap substantial rewards compare

Year: 2011
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