Adoption of standards under uncertainty

The presence of noise in compliance times may have a critical impact on the selection of new technological standards. A technically superior standard is not necessarily viable because an arbitrarily small amount of noise may render coordination on that standard impossible. We introduce the concept of a firm's "support ratio" defined as a function that depends only on characteristics of that firm. We show that for sufficiently patient firms, the viability of a standard does not depend on the distribution of noise in compliance times. The criterion for the viability of a standard is that the sum of support ratios of all firms be smaller than one.


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Firms, Noise, Standard, Support ratio

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AuthorsOstrovsky, Michael (Graduate School of Business, Stanford University, USA), Schwarz, Michael (University of California, Berkeley, USA)
Keywords:Firms, Noise, Standard, Support ratio