Choosing the Rules for Formal Standardization

Joseph Farrell, University of California, Berkeley

1/01/2005
(Original Publish Date: 1996)

Formal standardization - explicit agreement on compatibility standards - has important advantages over de facto standardization, but is marred by severe delays. I explore the tradeoffs between speed and the quality of the outcome in a private-information model of the war of attrition and alternative mechanisms, and show that the war of attrition can be excessively slow. I discuss strategies to reduce delay, including changes in intellectual property policy and in voting rules, early beginnings to standardization efforts, and the use of options.