R&D coordination in standard setting organizations: The role of consortia

Abstract

We analyze R&D competition and cooperation between firms involved in the development of a technology standard. Our model captures two types of incentives these firms are subject to: free-riding due to the public good nature of the standard and patent races in order to derive royalties from essential patents. As a consequence, R&D may be excessive or insufficient as compared to the collective optimum. Our goal is to test if consortia can address any type of inefficiency, by either reducing or increasing collective R&D investment. We address this question empirically on a large dataset of ICT standards, by assessing the effect of consortia on the number of standard-related patents filed by companies. After sorting standards entailing over or underinvestment, our results confirm that in the first case consortia have a chilling effect on patent filings, while it has an inflating effect in the second case.