Midterm Review: Interoperability and Competition

Competition within the interoperable market has its advantages and its disadvantages. For one, competition in markets for information technologies regularly leads to innovation and wider varieties of services to customers. However, this typically only arises when there is a level of playing field and few obstacles to market entry. Interoperability had a tendency to stimulate competition by making it easier for new players to join the market. Generally, wherever the level of interoperability among technologies in a given market has increased, competition and innovation have followed suit. Furthermore, network effects are crucial to the wellbeing and continuous development of today’s high-tech market. A network effect is the effect that one user of a good or service has on the value of that product to other people. This can help us comprehend why some technologies thrive where others fail as network effects can have a big influence on the way consumers act and can shape how users decide among noninteroperable devices, software, and services. These elements help energize competition in and out of the market.

Alternatively, it is probable for interop to steer the use of a sole technology for a large span of time, which can lead to uniformity. Uniformity may or may not be preferred as some consumers believe using the same technology continuously is just as effective. Though, if it is necessary for everything to be the same, this can result in a lack of innovation. In this case, interoperability may produce a time in where all structures are so standardized that they in-turn become the norm and eliminate diversity and selection. The outcome of standardization is a point of uniformity and this lock-in produced by many organizations structuring through a solitary standard could make it fairly hard to integrate technological advances as they arise. Therefore, corporations have a vital duty of achieving the right level of interop and evade the outcome of falling into uniformity instead of competition.


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