How to facilitate the diffusion of a new technology while avoiding market inefficiencies: Tensions between standardisation and a competitive market

Current societal challenges require technologies to be interconnected with one another along different steps of the value chain. They require interoperability. Said interoperability can be achieved by either vertical integration of products through one producer (monopoly) or through the adoption of open standards. However, agreement on a standard is often a difficult and lengthy process, in which companies’ interests (in terms of features, functionalities, etc.) might act as obstacles. We are thus faced with the dilemma between facilitating the market entry and diffusion of a new technology while avoiding market inefficiencies. To identify the enabling and disabling conditions that a technology in complex systems (i.e. with interoperability requirements and complex value chains) encounters, this paper will examine how different forms of technical alignment result in different stable configurations in the market. Three technologies will be analysed: Battery Electric Vehicles (BEVs), game consoles and payment systems at Points of Sale (POS).