industry image and sound just emerged from a bloody war on the adoption of technical standards for high definition players - the famous war between Bluray and HD DVD - primarily between Sony and Toshiba, the first having come to prevail ... This war has not been without cost from the rest, the long period of cohabitation standards have led to some indecision on the part Consumers still hindering the purchase of bluray players, consumers preferring to remain shivering on the good old DVD players, also ever more efficient and less expensive.
Partly to boost sales of bluray players (end 2009, approximately 50 million players sold worldwide, up sharply, but apparently did not offset the decline in purchasing DVD players in particular) manufacturers have had the idea to engage in the production of 3D technologies, Blu-ray technology being the only one capable of withstanding the amount of data needed to store high definition movies in 3D (technically, to achieve the 3D, we must the film is stored twice on the disc, once for the left eye and once for the right eye so that the famous impression of relief is possible). The famous James Cameron's Avatar anticipates that this technology could be both used in cinemas but also in our modest homes with very short term we are told televisions 3D. Sony CEO Howard Stringer has also recently said "The train of 3D is on track and we are ready to bring it to homes."
However, it appears that industry, far from having learned from the previous standards war, want to again do battle, two 3D technologies is apparently possible (see here ). The first is defended primarily by Sony (well, well ... already the protagonist of the last war) and the second by Panasonic. Behind this war "high tech" future lies is a war ongoing between technologies high definition television using plasma (Panasonic and LG mainly) or liquid crystal display (LCD), which is one of the main promoters. ... Sony.
To summarize, because of a technical point of view I do not know much, Panasonic defends the 3D camera through a 3D double objective while Sony is promoting a 3D camera with single objective.
From an economic standpoint, this is a situation studied by industrial organization known as the standards war (See for example what say Carl Shapiro and Hal Varaine in the book "Information rules: A Strategic Guide to Network Economy).
As often in the recent industrial organization, this situation is analyzed using tools from game theory, cooperative or uncooperative. The game of standardization described a noncooperative game between two firms that defend each standard, each with an interest in what their technology is ultimately the only one to be adopted. For those unfamiliar with the game, I can describe it briefly, resuming the presentation Thierry Pénard in fact, a colleague, there :
If we have two firms, each defending a technological standard, we can assume that the network effect will be maximized if manufacturers were able to implement a common standard, which would stimulate demand. Obviously the original proponent of the common standard would gain more than its rival. The worst situation is one in which each firm would adopt the technical standard of the other (which makes little sense but ...) and an intermediate situation is one in which the two standards coexist, as in the situation that prevailed before Toshiba épongue drops on HD DVD standard and the final adoption of bluray as a common standard. The game can be described as:
Partly to boost sales of bluray players (end 2009, approximately 50 million players sold worldwide, up sharply, but apparently did not offset the decline in purchasing DVD players in particular) manufacturers have had the idea to engage in the production of 3D technologies, Blu-ray technology being the only one capable of withstanding the amount of data needed to store high definition movies in 3D (technically, to achieve the 3D, we must the film is stored twice on the disc, once for the left eye and once for the right eye so that the famous impression of relief is possible). The famous James Cameron's Avatar anticipates that this technology could be both used in cinemas but also in our modest homes with very short term we are told televisions 3D. Sony CEO Howard Stringer has also recently said "The train of 3D is on track and we are ready to bring it to homes."
However, it appears that industry, far from having learned from the previous standards war, want to again do battle, two 3D technologies is apparently possible (see here ). The first is defended primarily by Sony (well, well ... already the protagonist of the last war) and the second by Panasonic. Behind this war "high tech" future lies is a war ongoing between technologies high definition television using plasma (Panasonic and LG mainly) or liquid crystal display (LCD), which is one of the main promoters. ... Sony.
To summarize, because of a technical point of view I do not know much, Panasonic defends the 3D camera through a 3D double objective while Sony is promoting a 3D camera with single objective.
From an economic standpoint, this is a situation studied by industrial organization known as the standards war (See for example what say Carl Shapiro and Hal Varaine in the book "Information rules: A Strategic Guide to Network Economy).
As often in the recent industrial organization, this situation is analyzed using tools from game theory, cooperative or uncooperative. The game of standardization described a noncooperative game between two firms that defend each standard, each with an interest in what their technology is ultimately the only one to be adopted. For those unfamiliar with the game, I can describe it briefly, resuming the presentation Thierry Pénard in fact, a colleague, there :
If we have two firms, each defending a technological standard, we can assume that the network effect will be maximized if manufacturers were able to implement a common standard, which would stimulate demand. Obviously the original proponent of the common standard would gain more than its rival. The worst situation is one in which each firm would adopt the technical standard of the other (which makes little sense but ...) and an intermediate situation is one in which the two standards coexist, as in the situation that prevailed before Toshiba épongue drops on HD DVD standard and the final adoption of bluray as a common standard. The game can be described as:
This game is a coordination game in which two Nash equilibria in pure strategies exist, each corresponding to an equilibrium situation in which a single common standard, and also a mixed strategy equilibrium in which each firm chooses its own standard with a probability of 4 / 5. Good reader notes that the highest level of welfare would be achieved (assuming that the gain to consumers is identical in all contingencies) with a single standard. So after such a game is quite undetermined, except that it is unlikely that two standards coexist for very long. That's what often shown as the recent history of audio-video technologies, one of two (sometimes three) standard eventually prevail at the end of a war a few years (VHS vs. Betamax, DVD-R vs. DVD + R vs. DVD-RAM, CD MiniDisc cons, BR vs HD DVD etc. ..). In fact, I realize that the predictive scope, leaving me a bit overwhelmed by the enthusiasm is not so bad: he finally (almost) always be a common standard, even if it takes time!
But interest is also to see the side of consumers and producers not only technology. They also benefit from network externalities ( player, did not you frequently cursed your friend (s) to have a friend DVD-R + when you had a DVD player monosize -R-and you really wanted to see the last episode of Derrick?? ) and actually have an interest in technology is only available on the market. We will assume, probably unfair, but successfully defended by Brian Arthur in the famous metaphor of QWERTY vs. QWERTY, no technology is truly better than another and that the surplus is removed by each consumer depends not the standard ultimately adopted, but only the number of consumers who use technology with me.
Suppose we have two consumers, utility and Their functions can be described as the world's easiest writing Ui = x + a (s) where Ui is the utility of consumer i, s is the total number of consumers using a certain technological standard (may be equal to 1 or 2) with the constraint that each consumer uses one of two technologies, x and has two positive parameters irrelevant for now. For example, consider that Ui is equal to 10 +0.7 sec Notes Well, reader, that the utility function is increasing in s. The game in its strategic form can be represented as follows:
Again, we are dealing with a coordination game (a game with a multiplicity of equilibria in pure strategies), a standard is finally chosen if we consider the Nash equilibrium in pure strategies (two possibilities). There is also a Nash equilibrium in mixed strategies, in which each consumer chooses a standard with a probability of 0.5. As in the previous game in the situation of the game producers, the outcome remains relatively unknown.
In this very simple, what will happen, the balance of choice is relatively unknown? An interesting article by C. Ruebeck et al. Published in 2003 in Southern Economic Journal, "Network Externalities and Standardization: A Classroom Demonstration " gives us some indications. Basically, they play a class of 15 students the game I just described with different parameters, the game presented at time involving only two players. The utility function written as above but with the following parameterization Ui = 20 + 2 (s). In this game, if the 15 participants chose the same standard, their utility for each is 20 +2 (15) 50, which gives property to be 15 * 50 = 750. If 7 choose one of the standards and the remaining eight the other standard, then those who chose the standard 1 will each win 20 +2 (7) or 34 and the other 8 will each win 20 +2 (8) or 36 points. Total welfare will be 7 * 34 + 8 * 36 or 526 points. There is therefore good in their game a loss of welfare relating to the allocation of consumers between the two standards, network effects are considerably weakened in this coexistence standards. The standards are not described as such in the choice, participants must choose different colored cards (orange or purple) and the gain of each participant is a function of the total number of cards selected in a particular color. I'll just give the main results of the treatment "simultaneous" in which participants make a choice of color at the same time and then have to make a game of pure coordination. They are listed in the table below, taken from the article cited:
In concurrent processing, the game is repeated 10 times (in exactly the same conditions). One might think that this number of periods is too low to observe any convergence, but a solid experimental literature on coordination games shows that in fact the players tend to converge quickly to a balance and they do not move easily, even if you repeat the game 100 times, as did Duffy & Hopkins in 2005. The document 10 periods may be sufficient to say something interesting. What is spectacular here is that the balance that seems to appear is the mixed strategy equilibrium, with about half the participants chose "orange" and the other half "purple", repetition hardly alter this proportion (such as number of participants is odd, we can have a frequency 50% for each standard, but does not baffle the reader, 7 / 15 or 8 / 15 is pretty close to 0.5 right?). In fact, a result very often highlighted in the experimental literature on coordination games (see Ochs 1995 in the Handbook of experimental economics): players randomize their strategies in coordination games these fairly consistent with theoretical predictions given by the Nash equilibrium mixed strategy. This strategy of randomization leads to an aggregate level that the frequency of a particular choice is close to the probability of such a choice of a theoretical perspective.
What conclusion? That, as an economist, it is not very wise too mock the concept of equilibrium in mixed strategies by presenting it as a form of rationality rather "curious" a theoretical point of view: agents seem to actually "randomize" their strategy in coordination situations difficult. Moreover, manufacturers of these new 3D technologies should also consider that consumers in these situations of coexistence of different standards, are logically undecided, and they are choosing a technology much like they would play at once. Moreover, if a bit risk averse, which is the case for most of us (geeks being a relatively small fraction of the population), the status quo and waiting is probably preferable. That is exactly what is happening with the delays in the widespread support Bluray. Far from having learned their lesson, industrialists unhappy and wanting to revive this disappointment technology bluray, then likely undergo another disappointment on the issue of 3D they do not make a greater effort of coordination now.
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