Abstract. Formal standardization – explicit agreement on compatibility standards – has important advantages over de facto standardization, but is marred by severe delays. I explore the tradeoffs between speed and the quality of the outcome in a private-information model of the war of attrition and alternative mechanisms, and show that the war of attrition can be excessively slow. I discuss strategies to reduce delay, including changes in intellectual property policy and in voting rules, early beginnings to standardization efforts, and the use of options. ♣ Even supposedly backward-compatible software isn’t always, and while the body of the paper below is (newly) pdf’d from the 1996 file, this title page and the references have had to be re-processed (March 2002); I am doing this in part because I hope soon to rescue this paper from my own “severe delays.” Compatibility standards often are developed through a process of explicit consensus. When participants have little vested interest in particular outcomes, the process will be straightforward | participants working together to ¯nd the best technical solution. If anything, there might be a free-rider problem, as development of the standard could be a

Abstract: This article contributes to the analysis of refusal to license cases as abuse of a domi-nant position pursuant Article 82 EC from an economic perspective. In the Microsoft case, the the European Commission introduced an “Incentives Balance Test ” for assessing whether the refusal to give access to interface information can be justified by the argument that this in-formation is protected by Intellectual Property Rights (IPRs): The Commission argued that if the overall innovative effects evoked by a compulsory license are significantly higher than without this access, the IPR owner is obliged to license. This should be assessed through bal-ancing the different incentives to innovate of the dominant firm and its competitors. In the paper we pursue two objectives: Firstly, we analyze to what extent the decision of the Court of First Instance, which confirmed the decision of the Commission, helps to clarify the criteria in refusal to license cases; in fact, it is disappointing in this regard. Secondly, we demonstrate that the basic idea of the Incentive Balance Test can be interpreted as a test whether the spe-cific IPRs of the dominant firm can be defended from the perspective of the economics of IPRs. This implies that Article 82 allows competition law to correct economically not optimal IPRs through a specific economic analysis. This is followed by a broad overview on theoreti-cal and empirical insights from economics of IPRs, innovation economics and competition and network economics that can help to develop a more general and sophisticated Innovation Effects Test that can be applied in Article 82 refusal to license cases.

this paper.