New Research on the Economic Impact of Technology Standards

A new report - The Economic Impact of Technology Standards - written by Jorge Padilla, John Davies and Aleksandra Boutin and published by Compass Lexecon examines the innovation performance of industries that operate based on open technology standards, agreed through voluntary participation in industry bodies. The authors analyze in particular the mobile telephony industry, which has seen remarkable growth and technical progress. The authors attribute this in part to the highly competitive market structure at all levels of the supply chain. They argue that the institutions that set technical standards for the mobile industry are partly responsible for these economic outcomes. As part of their analysis, the authors distinguish between standards that are set by governments or by individual companies, which can give rise to inefficiencies, and voluntary standard-setting by technology providers and equipment manufacturers, which leads to more competition in production, as well as more specialised research firms and greater diversity in research. The authors argue that these positive outcomes depend on the ability of Standard Development Organisations to strike the right balance between the interests of technology developers and technology users.