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Standards battles and Public Policy

Authors/Editors: Cabral, L.
Kretschmer, T.
Published: 2007
Type: Articles in Books and Non-Refereed Journals
ISBN/ISSN: 978-0-521-86450-3
Published by: Greenstein, Shane / Stango, Victor (Eds.): Standards and Public Policy
: New York, 2007, pp. 329-344

Abstract

We examine the effectiveness of public policy in a context of competing standards with network externalities. We show that, if the policymaker is very impatient, then it is optimal to support the leading standard; whereas, if the policymaker is very patient, then it is optimal to support the lagging standard. We also consider the timing for optimal intervention and provide sufficient conditions under which it is optimal to delay or not to delay intervention.