Market Strategy Issues
Dynamics and feedback effects in market organization
- Technology dictates standards and decision on whether or not to provide compatibility across different products
- These decisions determine the way industry structure will evolve (monopoly, oligopoly, monopolistic competition, competition)
- Market structure then determines pricing and profit margins
- Hence, anticipations about the evolution of market structure are important inputs into the decision on standard setting
- Example: Microsoft’s recent negotiations with AOL over standards for Windows XP