Compatibility is recognized to be a socially desirable outcome but the welfare implications from a uniform standard are still ambiguous. This paper studies the effect of unifying two incompatible standards for wireless networks in the U.S. wireless telecommunications market from 2015 to 2018. I develop and estimate a structural model of consumer choices of wireless carriers and 3G coverage investment to quantify the impact of a compatible network. Using counterfactual experiments, I find that compatibility is the welfare superior policy, regardless of the technology chosen. While the overall producer surplus is higher when moving to uniform wireless networks, whether consumers are better off depends on the technology standard chosen. Under a Global System for Mobile Communications (GSM) regime, consumer surplus decreases by $1.7 billion, coverage decreases by 20.01%, and prices increase for two wireless carriers. Under a Code Division Multiple Access (CDMA) compatible network, consumer surplus increases by $2.2 billion, coverage decreases by 9.78%, and prices fall for all four major carriers.
In this paper, I empirically study the effect of the Electrical and Electronics Engineers (IEEE)’s IPR policy change in 2015 on standard related innovation. I construct a novel dataset of companies that have declared at least one patent as essential for an IEEE standard (the treatment group), and I then collect a sample of firms active in the same industries and having similar characteristics but which have not declared a patent as essential to IEEE (the control group). Using a difference-in-differences approach, I provide causal evidence that the IEEE IPR policy change led to a reduction in standard related patenting among the firms affected by the change. My results show that more restrictive patent policies at the SDO level decrease the innovation effort of firms in standard related technologies by 15.2%.