ABSTRACT

Standards-based competition affects both the structure of the whole industry and the fate of the individual companies within it. The extant studies either simply divide the participants of a standard war into producers and consumers or adopt the analyzing tool of static game. This paper constructs a game model that includes the producers of core products, the producers of complementary products, and the final consumers. We analyze the condition and stability of each equilibrium and the impacts of the characteristics of core and complementary products on the equilibrium by using the method of evolutionary game. Our results show the following: (1) If the two technologies initially have separate advantages in terms of the number of complementary producers or consumers, there will be an equilibrium of the coexistence of the two technology standards; otherwise, there will be an equilibrium of single technology dominating. (2) The equilibrium of a single technology dominating is more stable than that of coexistence of multiple technologies. (3) The equilibrium of coexistence is more easily broken by the occasional shock of increasing or decreasing the number of complementary producers than by consumers. (4) Technology with poor core product quality and a high price for core and complementary products can coexist with other superior technologies only if the former has more consumers and complementary producers at the beginning of competition. JEL  L15  O33   

Keywords: Technical Standard; Ecosystem; Core Products; Complementary Products; Evolutionary Game