Chapter

Localized Technological Change and the Evolution of Standards as Economic Institutions <sup>1</sup>

Cristiano Antonelli

in The Dynamic Firm

Published in print September 1999 | ISBN: 9780198296041
Published online November 2003 | e-ISBN: 9780191596070 | DOI: http://dx.doi.org/10.1093/0198296045.003.0005
 Localized Technological Change and the Evolution of Standards as Economic Institutions  1

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Argues that localized technological change cannot be seen in isolation from national systems of innovation and the firm itself. It is shown how the often‐misunderstood role of standards as economic institutions plays an important part in the dynamics of technological change. Far from being only something of a public good, the adoption of standards poses a dilemma for an individual firm: should it stick to the local, monopolistic position built on proprietary knowledge or should it adhere to standards for better dissemination? There is also a cost for the firm associated with adopting standards. The author incorporates the emergence of standards into a formal model of a standardization club with both switching costs and network externalities, which then yields incentives for cooperative behaviour among firms for the adoption of standards.

Keywords: adoption of standards; companies; cooperative behaviour; costs; diffusion of information; economic models; firms; innovation; monopolies; network externalities; proprietary knowledge; standardization club; standards; technological change; technology

Chapter.  9460 words. 

Subjects: Microeconomics

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