Public R&D as a Standard-Setting Device
|Publikationsart:||Articles in Refereed Journals (International)|
|erschienen in:||Industry and Innovation, 21(7-8), pp. 599-615|
We propose a simple two-firm model with complementarities and imperfect knowledge about the optimal technology. Firms receive two signals about the technology, a public and a private one. We show that with complementarities public signals can serve as a coordination device between firms, even if the private signal is more precise. Our results point to an important function of standard-setting organizations and public R&D: providing a focal point for firms that might not coordinate otherwise.