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  5. Learning When to Quit: An Empirical Model Of Experimentation in Standards Development

American Economic Journal:
Microeconomics

ISSN 1945-7669 (Print) | ISSN 1945-7685 (Online)

Learning When to Quit: An Empirical Model Of Experimentation in Standards Development

  • Bernhard Ganglmair
  • Tomothy Simcoe
  • Emanuele Tarantino
American Economic Journal: Microeconomics (Forthcoming)

Abstract

Using data from the Internet Engineering Task Force, a vol- untary organization that develops protocols for managing Inter- net infrastructure, we estimate a dynamic discrete choice model of the decision to continue or abandon a line of research. The model's key parameters measure the speed at which authors learn whether their project will become a technology standard. We use the model to simulate two innovation policies: an R&D subsidy and a publication-prize. While subsidies have a larger impact on research output, the optimal policy depends on the level of R&D spillovers.

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