Cooperation/ Competition LO18177

Simon Buckingham (
Sat, 23 May 1998 11:08:04 +0100

I have been reflecting on the issue of competition and comoperation as
related to one of my lifestreams- mobile phones. The digital mobile phone
standard GSM cleverly combined elements of cooperation and competition.
For example, the interfaces between different network elements was
standardized, but the design and features of the entities themselves were
largely left up to the vendors (sunbject to minimum requirements). Hence,
we see lots of different designs of mobile phones from many different
manufacturers, even though they all conform to the same standard.

The committees that set the GSM standard are comprised of representatives
of different mobile phone interested parties- networks, hardware vendors
etc. Competitors routinely sit on the same committees and sometimes they
support each other's initiatives and sometimes they don't. They cooperate
to set the standard and then compete to implement that standard. This goes
back to Nalebuff's claim that cooperation creates the pie and competition
divides it into different sized slices.

I think this could be where Microsoft went wrong- not only did they
(unilaterally) set the standard for PC software, but they also repeatedly
tried to leverage these standards to capture the competition those
underlying standards facilitates. This can create a monopoly when only one
player is setting a standard, even if it is just a transient one because
of continously evolving customer preferences and requirements.

Cooperation creates the market, competition continues the market. You
cannot explicitely state that one or other is "good" or "better", it
depends what you are trying to achieve. Obviously competitors colluding to
set a standard has a very different level of desirability to those same
companies colluding to stifle competition.

I would say that the desirable and valuable end result from either
cooperating or competing should be innovation. Industries develop through
perpetual development/ deployment cycles. Both development and deployment
stimulate innovation- end users give feedback through their purchasing
patterns that suppliers can subsequently incorporate into future product

We should probably look at the ends we wish to achieve and then determine
which configuation of cooperation and competition will achieve it- I
wonder if this dynamic ends-based model of assessing competition and
cooperation accounts for the differing views in different situations of
different people contributing to this thread.

regards, sincerely, simon buckingham, 2 new articles weekly at


"Simon Buckingham" <>

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