Format Wars

The Freakonomics blog asked some experts to weigh in on the HD-DVD/Blu-Ray format war. My favorite comment was from Andrei Hagiu, shop assistant professor of business administration at Harvard Business School:

Perhaps one lesson that this particular war drives home particularly well is this: not fighting in the first place might be a very good strategy to win, if only the contestants could be smart enough at the beginning. Mounting investments in standard wars is akin to a bidding war for a $20 bill: once you’ve decided to participate, you are sucked into a wasteful battle, in which people bid higher than $20.

Certainly true enough.

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