INSTITUTIONAL RELATIONSHIPS AND TECHNOLOGY COMMERCIALIZATION - LIMITATIONS OF MARKET-BASED POLICY

U.S. technology commercialization policies have focused on efforts to correct "market failures". Policy subsidizing innovation and antitrust policy both seek to increase market efficiency and thus attain welfare gains. One problem is that these policies make conflicting assumptions about individual economic behavior. This leads to inconsistent policy. A second problem is that non-market relationships, such as those embodied in industry standard-setting bodies, professional and trade associations, and inter-institutional cooperation also influence the process of technology commercialization. A comparison of U.S. and Japanese institutional responses to the commercial potential of high definition television suggests that (1) the market approach to this technology has led to conflicting policy prescriptions in the U.S., and (2) Japanese policymakers have been more effective than their American counterparts in facilitating non-market relationships. Implications for U.S. policy are discussed.