Abstract

We study the efficiency of the standard-setting process when standards result from competition between groups of firms sponsoring different technologies. We show thatex anteagreements may decrease welfare in the case of standards wars: Even though industry profits are larger withex anteagreements, welfare is not necessarily larger, because the interests of firms and society may not be aligned. This result contrasts with the findings of previous works studyingde juremonopoly standards. Including adopters in the standard-setting process may restore the efficiency ofex anteagreements.