Open architecture and R&D incentives

Research output: Contribution to journalArticle

3 Citations (Scopus)

Abstract

In open systems, firms give up their property rights to technologies and permit other companies to use these technologies. We ask how an incumbent's architecture choice affects social welfare by altering R&D competition among firms. More specifically, we ask whether an incumbent, by adopting an open system, can establish its socially inefficient technology as the market standard, while an entrant is developing a more efficient technology. It is shown that an incumbent has an incentive to preempt an entrant's competing technology by choosing an open system, but that the open system might result in a premature market standard.

Original languageEnglish
Pages (from-to)547-568
Number of pages22
JournalJournal of Industrial Economics
Volume52
Issue number4
DOIs
Publication statusPublished - 2004 Dec
Externally publishedYes

ASJC Scopus subject areas

  • Accounting
  • Business, Management and Accounting(all)
  • Economics and Econometrics

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