Unlocking technology: Antitrust and innovation

Journal of Competition Law and Economics

Volumn 4, Issue 4, 2008, Pages 915-966

  Spulber, Daniel F ^a  

^a NORTHWESTERN UNIVERSITY   (United States)

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[No Author keywords available]

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EID: 57849094991     PISSN: 17446414     EISSN: 17446422     Source Type: Journal    
DOI: 10.1093/joclec/nhn016     Document Type: Article

References (163)

1. The Commission of the European Communities (Commission) predicted that Microsoft's Media Player would dominate other forms of players. The arguments supporting the prediction were fundamentally flawed and not surprisingly the prediction proved to be wildly inaccurate, with the rise of Adobe Flash Player, Apple iTunes, and other market alternatives. The Commission further maintained that Microsoft's server operating system would have an unfair advantage over other server operating systems. See Microsoft Corporation against Commission of the European Communities, Case T-201/04, Ruling on September 17, 2007 by the European Court of First Instance; see also Commission of the European Communities, Commission decision of March 24, 2004, relating to a proceeding under Article 82 of the EC Treaty (Case COMP/C-3/37.792 Microsoft), Brussels, April 21, 2004, C(2004)900 final.
2. W.B. Arthur, Competing Technologies, Increasing Returns, and Lock-in by Historical Events, 97 ECON. J. 116 (March 1989). Arthur claims that recognizing positive feedbacks creates an entirely new economics.
3. See also W.B. Arthur, INCREASING RETURNS AND PATH DEPENDENCE IN THE ECONOMY (Ann Arbor, MI: University of Michigan Press 1994);
4. P. David, Clio and the Economics of QWERTY, 75 AMERICAN ECON. REV. 332 (1985);
5. P. David, Heroes, Herds and Hysteresis in Technological History: Thomas Edison and "The Battle of the Systems" Reconsidered, 1 INDUS. & CORP. CHANGE 129 (1992).
6. There is some mention of switching costs but the network externalities explanation is predominant in the literature. I address switching costs later in the discussion.
7. For a critical discussion of the concept of network effects that is closely related to the arguments in the present article, see D.F. Spulber, Consumer Coordination in the Small and in the Large; Implications for Antitrust in Markets with Network Effects, 4 J. COMPETITION L. & ECON. 1 (June 2008).
8. See S.J. Liebowitz & S.E. Margolis, The Fable of the Keys, 33 J.L. & ECON. 1 (1990);
9. S.J. Liebowitz & S.E. Margolis, WINNERS, LOSERS, AND MICROSOFT: COMPETITION AND ANTITRUST IN HIGH TECHNOLOGY (Oakland, CA: Independent Institute 1999).
10. See Spulber (2007), supra note 4.
11. For a comprehensive overview, see particularly C. Forman & A. Goldfarb, Diffusion of Information and Communication Technologies to Business in HANDBOOK IN INFORMATION SYSTEMS 1-52 (T. Hendershott, ed., Amsterdam: Elsevier, vol. 1 2006).
12. Microsoft Corporation against Commission of the European Communities Case T-201/04, Ruling on September 17, 2007 by the European Court of First Instance.
13. The appellate court in Microsoft stated that "[i]n markets characterized by network effects, one product or standard tends towards dominance, because the utility that a user derives from consumption of the good increases with the number of other agents consuming the good." United States v. Microsoft Corp., 253 F.3d 34, 49 (D.C. Cir.), cert. denied, 534 U.S. 952 (2001).
14. See also Novell, Inc. v. Microsoft Corp., 505 F.3d 302 (4th Cir. 2007).
15. Alabama Power Co. v. FCC, 311 F.3d 1357 (11th Cir. 2002);
16. Flying J, Inc. v. Comdata Network, Inc., 405 F.3d 821 (10th Cir. 2005);
17. Covad Communs. Co. v. Bellsouth Corp., 314 F.3d 1282 (11th Cir. 2002);
18. Poller v. Columbia Broadcasting System, Inc., 284 F.2d 599 (D.C. Cir. 1960);
19. LiveUniverse, Inc. v. MySpace, Inc., Case No. CV 06-6994 (C.D. Cal. 2007);
20. N.Y. Mercantile Exch., Inc. v. IntercontinentalExchange, Inc., 323 F. Supp. 2d 559 (S.D.N.Y. 2004).
21. United States v. Visa U.S.A., Inc., 163 F. Supp. 2d 322, 379 (S.D.N.Y. 2001).
22. See Tim Wu & C.S. Yoo, Keeping the Internet Neutral?: Tim Wu and Christopher Yoo Debate, 59 FED. COMM. L.J. 575 (2007);
23. C.S. Yoo, Network Neutrality, Consumers, and Innovation, U. CHIC. LEGAL F. (forthcoming 2008);
24. C.S. Yoo, Beyond Network Neutrality, 19 HARV. J. ON L. & TECH. 1 (2005).
25. U.S. 451 (1992).
26. G.L. Priest, Rethinking Antitrust Law in an Age of Network Industries John M. Olin Center for Studies in Law, Economics, and Public Policy, Research Paper No. 352, Yale Law School (2007).
27. D.F. Spulber, Consumer Coordination in the Small and in the Large: Implications for Antitrust in Markets with Network Effects, 4 J. COMPETITION L. & ECON. 1 (June 2008).
28. D.F. Spulber & C.S. Yoo, Access to Networks: Economic and Constitution Connections, 88 CORNELL L. REV. 885 (2003);
29. D.F. Spulber & C.S. Yoo, Network Regulation: The Many Faces of Access 1 (4) J. COMPETITION L. & ECON. 645 (December 2005);
30. D.F. Spulber & C.S. Yoo, On the Regulation of Networks as Complex Systems: A Graph Theory Approach, 99 NW. U. L. R. 1687 (2005);
31. D.F. Spulber & C.S. Yoo, Mandating Access to Telecom and the Internet: The Hidden Side of Trinko, 107 COLUM. L. REV. 1822 (2007);
32. D.F. Spulber & C.S. Yoo, NETWORKS IN TELECOMMUNICATIONS: ECONOMICS AND LAW, (Cambridge: Cambridge University Press 2007).
33. J.G. Sidak & D.F. Spulber, The Tragedy of the Telecommons: Government Pricing of Unbundled Network Elements Under the Telecommunications Act of 1996, 97 COLUM. L. REV.1201 (1997)
34. J.G. Sidak & D.F. Spulber, Network Access Pricing and Deregulation 6:4 INDUS. & CORP. CHANGE 757 (1997);
35. J.G. Sidak & D.F. Spulber, DEREGULATORY TAKINGS AND THE REGULATORY CONTRACT: THE COMPETITIVE TRANSFORMATION OF NETWORK INDUSTRIES IN THE UNITED STATES (Cambridge: Cambridge University Press 1997);
36. J.G. Sidak & D.F. Spulber, Deregulation and Managed Competition in Network Industries, 15 YALE J. ON REG. 117 (1998);
37. J.G. Sidak & D.F. Spulber, Cyberjam: Internet Congestion of the Telephone Network, 21(2) HARV. J. L. & PUB. POL'Y 327 (1998).
38. S.J. Liebowitz & S.E. Margolis, Network Externality: An Uncommon Tragedy, 8 J.ECON. PERSP. 133 (1994);
39. S.J. Liebowitz & S.E. Margolis, Path Dependence, Lock-in and History 11 J.L., ECON. & ORG. 205 (1995);
40. S.J. Liebowitz & S.E. Margolis, Are Network Externalities a New Source of Market Failure?, 17 RES. L. & ECON. 1 (1995);
41. S.J. Liebowitz & S.E. Margolis, Market Processes and the Selection of Standards, 9 HARV. J.L. & TECH. 283 (1996);
42. S.J. Liebowitz, & S.E. Margolis, Network Effects, in HANDBOOK OF TELECOMMUNICATIONS ECONOMICS (M.E. Cave et al., eds., Amsterdam: Elsevier Science, vol. 1 2002).
43. S.J. Liebowitz & S.E. Margolis, Path Dependence, Lock-in, and History 11 J.L., ECON. & ORG. 205 (April 1995).
44. Liebowitz and Margolis refer to optimization based on initial conditions as "first-degree path dependence." Liebowitz and Margolis refer to optimization under uncertainty based on available information as "second-degree path dependence." Liebowitz and Margolis refer to the assumption that markets make incorrect choices in technology that governments can correct as "third-degree path dependence." Id.
45. M.L. Katz & C. Shapiro, Systems Competition and Network Effects, 8 J. ECON. PERSP. 93 (1994).
46. M.L. Katz & C. Shapiro, Network Externalities, Competition, and Compatibility, 75 AM. ECON. REV. 424, 426 (June 1985).
47. M.L. Katz & C. Shapiro, Technology Adoption in the the Presence of Network Externalities, 94 J. POL. ECON. 822, 826 (August 1986).
48. M.L. Katz & C. Shapiro, Product Introduction with Network Externalities, 40 J. INDUS. ECON. 55, 58 (March 1992).
49. J. Farrell & G. Saloner, Standardization, Compatibility, and Innovation, 16 RAND J. ECON. 70, 73 (1985).
50. J. Farrell & G. Saloner, Installed Base and Compatibility: Innovation, Product Preannouncements, and Predation, 76 AM. ECON. REV. 940, 941 (December 1986).
51. J. Farrell & G. Saloner, Converters, Compatibility, and the Control of Interfaces, 40 J. INDUS. ECON. 9 (March 1992).
52. J.P. Choi & M. Thum, Market Structure and the Timing of Technology Adoption With Network Externalities, 42 EUR. ECON. REV. 225 (1989).
53. See B. Arthur, Competing Technologies, Increasing Returns, and Lock-in by Historical Events, 97 ECON. J. 116, 117 (1989);
54. see also B. Arthur, Positive Feedbacks in the Economy, 262 SCI. AM. 92 (February 1990);
55. B. Arthur (1994), supra note 2.
56. R. Cowan, Tortoises and Hares: Choice Among Technologies of Unknown Merit, 101 ECON. J. 801, 801-814 (July 1991).
57. J. Farrell & P. Klemperer, Coordination and Lock-in: Competition with Switching Costs and Network Effects, HANDBOOK OF INDUSTRIAL ORGANIZATION (Berkeley, CA: University of California, Berkeley 2006).
58. Liebowitz & Margolis (1994) & (2002), supra note 5.
59. See J. Rohlfs, A Theory of Interdependent Demand for a Communications Service, 5 BELL J. ECON. & MGMT. SCI. 16 (1974).
60. Artle and Averous examine interdependent demand in communications based on the number of subscribers. See R. Artle & C. Averous, The Telephone System as a Public Good: Static and Dynamic Aspects, 4 BELL J. ECON. & MGMT. SCI. 89 (1973). On network effects, see also N. Economides, The Economics of Networks, 14 INT'L J. INDUS. ORG. 673 (Mar. 1996),
61. N. Economides & C. Himmelberg, Critical Mass and Network Evolution in Telecommunications, in TOWARD A COMPETITIVE TELECOMMUNICATIONS INDUSTRY: SELECTED PAPERS FROM THE 1994 TELECOMMUNICATIONS POLICY RESEARCH CONFERENCE (Gerard Brock ed., Mahwah, NJ: Lawrence Erlbaum Associates 1995).
62. i di
63. The additively separable form is for purposes of exposition and allows for a clear discussion of the main issues. The discussion can be generalized to allow for different functional forms, but this would complicate the discussion unnecessarily. Let g(n) be increasing and concave in n, g′(n) 0 and g″(n) < 0. Let h(i) be increasing and (weakly) convex in i, h′(i > 0 and h″(t) > 0. Let g(0) - 0 because network effects require some participation. Normalize h such that h(0) = 0.
64. For any given price, p, of the network good, a type i consumer adopts the good if his benefits are greater than or equal to the price, g(n) - h(i) ≥ p. If a consumer i adopts the network good, all consumers with lower types also will adopt the network good. The marginal consumer exhausts all net benefits, g(n) - h(i) = p.
65. The function g(n) - h(n) is u-shaped because g(n) is increasing and concave and h(n) is increasing and (weakly) convex.
66. ij refers to the idiosyncratic preferences of a member of group i = 1, 2 with regard to technology j = A, B.
67. 2A.
68. 2B.
69. 2B.
70. R.H. Coase, The Problem of Social Cost, 3 J.L. & ECON. 1 (1960).
71. C. Tucker, Interactive, Option-Value and Domino Network Effects in Technology Adoption (MIT, Sloan, Working Paper, February 2006).
72. Farrell and Saloner (1985) find that, with asymmetric information, the equilibrium of the adoption game fails to be Pareto efficient when users cannot communicate. Allowing some communication eliminates such excess inertia when preferences coincide but increases it when preferences differ.
73. See J. Farrell & G. Saloner, Standardization, Compatibility, and Innovation, 16 RAND J. ECON. 70 (1985).
74. 2B.
75. Farrell and Saloner (1985, 1986) apply a total surplus criterion in defining "excess inertia." They add the benefits of new adopters and those of the installed base. Tley state that "the installed base may cause excess inertia" (1986, p. 942).
76. See EA. Hayek, Spontaneous (Grown) Order and Organized ('Made') Order, in MARKET, HIERARCHIES & NETWORKS: THE COORDINATION OF SOCIAL LIFE 293-301 (G. Thompson, J. Francis, R. Levacic & J. Mitchell eds, Sage Publications, London 1991);
77. EA. Hayek, LAW, LEGISLATION AND LIBERTY, VOLUME 2: THE MIRAGE OF SOCIAL JUSTICE (Chicago, IL: The University of Chicago Press 1976);
78. F.A. Hayek, The Creative Powers of a Free Civilization, Essays on Individuality.
79. F.S. Kieff, Coordination, Property, and Intellectual Property: An Unconventional Approach to Anticompetitive Effects and Downstream Access 56 EMORY L.J. 327 (2006).
80. For a comprehensive examination of network effects, see D.F. Spulber, Consumer Coordination in the Small and in the Large; Implications For Antitrust in Markets With Network Effects, J. COMPETITION L. & ECON. (forthcoming 2007).
81. D.F. Spulber, Firms and Networks in Two-Sided Markets, in HANDBOOK IN INFORMATION SYSTEMS 137-200 (T Hendershott ed., Amsterdam: Elsevier, vol. 1 2006).
82. Committee T1A1, [renamed Network Performance, Reliability and Quality of Service Committee (PRQC)], 2000, ATIS Telecom Glossary 2000, Washington, DC: Alliance for Telecommunications Industry Solutions.
83. The definition of interoperability is based on that of the Institute of Electrical and Electronics Engineers 1990, IEEE Standard Computer Dictionary: A Compilation of IEEE Standard Computer Glossaries, New York, NY.
84. T. Bresnahan & S.M. Greenstein, Technical Progress and Co-invention on Computing and in the Uses of Computers, in BROOKINGS PAPERS ON ECONOMIC ACTIVITY: MICROECONOMICS 1-78 (Brookings Institution Press 1997);
85. T. Bresnahan & S.M. Greenstein, Technological Competition and the Structure of the Computer Industry, 47 J. INDUS. ECON. 1 (March 1999);
86. S.M. Greenstein, Industrial Economics and Strategy: Computing Platforms, 18 IEEE Micro 43 (May-June 1998).
87. D.F. Spulber & C.S. Yoo, Network Regulation: The Many Faces of Access 1 (4) J. COMPETATION L. & ECON. 635 (December 2005);
88. D.E Spulber & C.S. Yoo, On the Regulation of Networks as Complex Systems: A Graph Theory Approach, 99 NW. U.L. REV. 1687 (2005);
89. D.F. Spulber & C.S. Yoo, Mandating Access to Telecom and the Internet: The Hidden Side of Trinko, 107 COLUM. L. REV. 1822 (2007).
90. For an introduction to graph theory, see J.M. Aldous & R.J. Wilson, GRAPHS AND APPLICATIONS: AN INTRODUCTORY APPROACH (New York: Springer 2000),
91. B. Bollobás, MODERN GRAPH THEORY (New York: Springer 1998), R. Diestel, GRAPH THEORY (New York: Springer, 2d ed. 2000),
92. W.T. Tutte, GRAPH THEORY (Cambridge: Cambridge University Press 2001), J. Gross & J. Yellen, GRAPH THEORY AND ITS APPLICATIONS (Boca Raton: CRC Press 1999),
93. and HANDBOOK OF GRAPH THEORY (J. Gross & J. Yellen eds, Boca Raton: CRC Press 2004).
94. See J. Rohlfs, A Theory of Interdependent Demand for a Communications Service, 5 BELL J. ECON. & MGMT. SCI. 16 (1974).
95. These estimates are for 1997. See H. Miller & J. Sanders, Scoping the Global Market: Size is Just Part of the Story, in ITPro 49-55 (Mar./Apr. 1999);
96. see also Digital Planet: The Global Information Economy, World Information Technology and Services Alliance, 1999.
97. See J. Hurd & J. Isaak, IT Standardization: The Billion Dollar Strategy, 3 J. IT STANDARDS & STANDARDIZATION RES. 68 (JANUARY-JUNE 2005).
98. Forman & Goldfarb (2006), supra note 7.
99. See C. Tucker (2006), supra note 43.
100. C. Cargill & S. Bolin, Standardization: A Failing Paradigm, in STANDARDS AND PUBLIC POLICY 296-328 (S. Greenstein and V Stango, eds, Cambridge: Cambridge University Press 2007).
101. J.J. Anton & D.A. Yao, Standard-Setting Consortia, Antitrust, and High-Technology Industries, 64 ANTITRUST L.J. 247, 247 (1995).
102. Hurd & Isaak, supra note 59.
103. This is according to a study by J. Gantz and V. Turner (2002), "Standardization: The Secret to IT Leverage," IDC White Paper, Sponsored by Dell Computer Corp., Framingham, MA.
104. Id.
105. Id.
106. Id.
107. Id.
108. The information in this paragraph is drawn from Gantz & Turner (2002 , supra note 65.
109. See D.E Spulber & C.S. Yoo (2008) for additional discussion of access.
110. On regulation of broadband, see R.W Crandall & J.G. Sidak, Competition and Regulatory Policies for Interactive Broadband Networks 68 S. CAL. L. REV. 1203 (1995).
111. See Jonathan Richards, Amazon Launches Music Download Service to Challenge iTunes, TIMES ONLINE, September 26, 2007.
112. This list is from www.ecma-international.org.
113. See J. Bulow, J. Geanokoplos & P. Klemperer, Multiproduct Oligropoly: Strategic Substitutes and Complements, 93 J. POL. ECON. 488 (1985). The actions of two firms are strategic substitutes (complements) if an increase in one firm's action lowers (raises) the marginal effects on its profits of the other firm's action.
114. This was the substance of Bertrand's 1883 critique of the 1838 Cournot model. This debate lies at the foundation of much of the economic field of Industrial Organization. See D.F. Spulber, REGULATION AND MARKETS ch. 17 (Cambridge, MA: MIT Press 1989).
115. Katz & Shapiro (1985).
116. This is the standard Hotelling model of a differentiated duopoly.
117. A - Ng′(N/2). At the equilibrium in either case, the two firms split the market at N/2. Compatibility increases prices and the firms' profits. The analysis generalizes to positive marginal costs.
118. The formal representation of these two effects is as follows: δCS = g(N) - g(N/2) - Ng′(N/2). Ifg(n) = √n, for example, ΔCS = √ N (1 - √ 2), which is less than zero.
119. Farrell & Saloner (1992), supra note 7, at 32.
120. C. Matutes & P. Regibeau, "Mix and Match": Product Compatibility Without Network Externalities, 19 RAND J. ECON. 221.
121. N. Economides, Desirability of Compatibility in the Absence of Network Externalities, 79 AM. ECON. REV. 1165 (December 1989).
122. See, e.g., Farrell & Saloner (1985).
123. See, e.g., Farrell & Saloner (1986).
124. Liebowitz & Margolis (1994) at page 139 conclude that indirect network externalities "describe nothing more than welfare-neutral interactions that occur in properly functioning markets."
125. See Arthur (1989);
126. see also R.R. Nelson & S.G. Winter, AN EVOLUTION THEORY OF ECONOMIC CHANGE (Cambridge, MA: Belknap-Harvard University Press 1989);
127. A.B. Atkinson & J.E. Stiglitz, A New View of Technological Change, 79 ECON. J. 573 (September 1969);
128. K.J. Arrow, The Economic Implications of Learning by Doing, 29 REV. ECON. STUD. 155 (June 1962).
129. N. Rosenberg, INSIDE THE BLACK BOX: TECHNOLOGY AND ECONOMICS (Cambridge: Cambridge University Press 1982).
130. For an overview of the literature, see J. Farrell & P. Klemperer (2006), supra note 31.
131. David (1985), supra note 2, at 335-36.
132. In fact, switching costs can reduce the profits of incumbents. See G. Biglaiser, J. Crémer, & G. Dobos, The Value of Switching Costs (University of North Carolina, Working Paper, 2007).
133. The main example given to show that markets fail due to technology lock-in is that of the design of the typewriter keyboard. The story of the keyboard is inaccurate as shown by Liebowitz & Margolis (1990). As other evidence that markets tend to choose the wrong technology and then get locked in, economists usually point to the success of VHS over Beta in the market for video cassette recorders. Supposedly, the market standard VHS was inferior to the failed Beta technology but VHS was more established. However, there is substantial evidence that this example of technology lock-in is also historically and technically inaccurate. See Liebowitz & Margolis (1999). Another questionable example of path dependence concerns the inefficiency of small rail cars used to carry coal in Great Britain. Va Nee L. Van Vleck shows that the coal cars were part of a larger system that included local delivery by horse cart and later by truck. Large rail cars would have been likely to raise total costs of delivery and so were efficient as part of a transportation system. See V.N.L. Van Vleck, Delivering Coal by Road and by Rail in Great Britain: The Efficiency of the "Silly Little Bobtailed Wagons", 57 J. ECON. HIST. 139 (1997).
134. See Liebowitz & Margolis (1994) & (1995).
135. See B.H. Hall, Innovation and Diffusion, in THE OXFORD HANDBOOK OF INNOVATION ch. 17, 459-84 (J. Fagerberg, D.C. Mowery, & R.R. Nelson, eds, Oxford: Oxford University Press 2005).
136. For a sociological overview, see E.M. Rogers, DIFFUSION OF INNOVATIONS (New York: Free Press, 4th ed. 1995).
137. Hall (2005), supra note 96.
138. G. Saloner & A. Shepard, Adoption of Technologies With Network Effects: An Empirical Examination of the Adoption of Automated Teller Machines, 26 RAND J. ECON. 479 (1995).
139. See particularly F. Bass, The Relationship Between Diffusion Rates, Experience Curves, and Demand Elasticities for Consumer Durable Technological Innovation, 53 J. Bus. 551 (July 1980);
140. see also S. Kalish, Monopolistic Pricing with Dynamic Demand and Production Costs, 2 MARKETING SCI. 135 (Spring 1983).
141. o be given. The dependence of the rate of adjustment on cumulative sales reflects the effects of sales on information received by prospective consumers. The diffusion rate yields a logistic curve, which relates cumulative sales to time.
142. For an overview of diffusion models in marketing, see Chapter 10 in G.L. Lilien, P. Kotler, & K.S. Moorthy, MARKETING MODELS (Englewood Cliffs, NJ: Prentice-Hall 1992).
143. See the review of work on advertising, prices, and sales effort on page 473. The standard model of the diffusion of an innovation is due to F. Bass, A New Product Growth Model for Consumer Durables, 15 MGMT. SCI. 215 (January 1969).
144. This might apply to the often-cited example of improvements in Boeing aircraft. See Hall (2005), supra note 96, at 470;
145. N. Rosenberg, Factors Affecting the Diffusion of Technology, 10 EXPLORATIONS IN ECON. HIST. 3 (1972);
146. N. Rosenberg, Learning by Using, in N. Rosenberg, INSIDE THE BIACK BOX 120-40 (Cambridge: Cambridge University Press 1982).
147. Commission Decision, supra note 1, at 207.
148. Commission Decision, supra note 1, at 115.
149. See S.M. Besen & J. Farrell, Choosing How to Compete: Strategies and Tactics in Standardization, 8 J. ECON. PERSP. 117 (1994), and the references therein.
150. Id. at 119.
151. Id. at 122-24.
152. See A.D. Chandler, INVENTING THE ELECTRONIC CENTURY 2 (New York: Free Press 2001).
153. Id.
154. Id. Chandler highlights the importance of various firm capabilities in R&D, marketing, production, and management.
155. Id. at 238.
156. Anton & Yao (1995), supra note 63, at 263.
157. Hovenkamp (2005), at 281.
158. See www.consortiuminfo.org for a list of over 460 consortia, accredited standards bodies, and open source projects.
159. Mark A. Lemley, Intellectual Property Rights and Standard-Setting Organizations (Boalt Hall, Working Papers in Public Law, UC Berkeley 2002).
160. Simcoe et al. found that "SSO patents have a relatively high litigation rate, and that SSO patents assigned to small firms are litigated more often than those of large publicly-traded firms." TS. Simcoe, S.J.H. Graham, & M. Feldman, Competing on Standards: Entrepreneurship, Intellectual Property and the Platform Standard (NBER Working Paper No. 13632, November 2007).
161. See M. Rysman & T.S. Simcoe, Patents and the Performance of Voluntary Standard Setting Organizations (Boston University, Department of Economics Working Paper, June 2007).
162. However, Simcoe found that the Internet Engineering Task Force (IETF) experienced a slowdown in standards production between 1993 and 2003 due to "distributional conflicts created by the increasing commercialization of the Internet during that time period." TS. Simcoe, Standard Setting Committees, (Rotman School of Management, University of Toronto, Working Paper, December 2006).
163. F.A. Hayek, Competition as a Discovery Procedure, 5 Q. J. AUSTRIAN ECON. 9 (Fall 2002).