Technology standard under Cournot competition

Abstract

ABSTRACT Technology standard is widely employed in many industries and affects competition intensively. With game theory approaches, this article analyses technology standards under Cournot competition. First, the equilibrium is obtained with matrix approaches. The horizontal differentiation yields the complicated model and this article proposes a matrix method. Second, uniform technology standard improves the regional advantages and hurts the regions with low technology. Third, firms with cost advantages benefit from minimum technology standard (MTS) because MTS draws firms with high costs away from the corresponding industries. In this way, MTS stimulates the innovation of low technology. Moreover, MTS decreases the total outputs. Finally, MTS increases average costs because of the assumption of decreasing return to scale, while linear cost implies the reducing average costs under MTS.