Openness better for SDOs.
Simcoe 05 – Professor of Strategic Management at the University of Toronto, PhD in Business Administration and M.A. in Economics from the University of California at Berkeley.
Tim Simcoe, “Chapter 8: Open Standards and Intellectual Property Rights,” Open Innovation: Researching a New Paradigm, 09-16-2005, https://people.bu.edu/tsimcoe/documents/published/OpenStandards_IPR.pdf
Why, then, do firms participate in “open” standards development? The short answer is that open standards usually produce more value than closed standards. For consumers, open standards create value by promoting competition between implementations. This leads to a combination of lower prices and improved product quality. For the firms selling products that implement a standard, open-ness increase demand by resolving the uncertainties associated with potential coordination failures. Open-ness can also reduce implementers’ costs through explicit restrictions on the “tax” that can be imposed by technology licensors or through ex ante (i.e. pre-standardization) competition between the sponsors of rival technologies.