Network Effects. Standard Competition and Public Policy

Author: Neng Hongxing
Publisher:
Publish Date: 2006-06-01
Features: This book is a theoretical monograph on standard competition and public policy in the context of network effects. It covers an overview of standards and standard competition, network effects, contemporary standard competition, intergenerational standard competition, virtual network standard competition, and public policy on standard competition, making it suitable for reference and study by economics researchers. The book examines a special form of network standard competition: virtual network standard competition with indirect network effects. Its focus lies in studying the relationships between complementary product manufacturers, such as strategies of openness versus control, revolution versus compatibility, and others. In contemporary virtual network standard competition, firms not only engage in horizontal competition among hardware manufacturers but also in vertical competition between hardware and software manufacturers. When neither hardware manufacturer controls the software market, cost advantages and non-exclusive intellectual property strategies help win standard competition, while controlling the software market price provides survival space for exclusive standards. The strategic focus of intergenerational virtual network standard competition lies in compatibility: whether the latecomer standard needs the support of the software manufacturers of the earlycomer standard. The book briefly analyzes China's standard competition strategy. Standard competition offers developing countries the opportunity to alter the global economic order and achieve catch-up goals, but it also presents significant challenges. Chinese standards face both clear latecomer disadvantages and considerable latecomer advantages—the key lies in establishing appropriate technological advancement directions and implementing suitable competitive strategies.