Journal of Marketing Research Vol. XLIII (May 2006), 224–236 224 © 2006, American Marketing Association ISSN: 0022-2437 (print), 1547-7193 (electronic) *Amitav Chakravarti is Assistant Professor of Marketing, Department of Marketing, New York University (e-mail: achakrav@stern.nyu.edu). Jin- hong Xie is Associate Professor of Marketing, Department of Marketing, University of Florida (e-mail: jinhong.xie@cba.ufl.edu). The authors thank Bart Weitz, Joe Alba, Rich Lutz, and Alan Sawyer for their detailed com- ments and many helpful suggestions. This article was accepted under for- mer editor Dick Wittink. AMITAV CHAKRAVARTI and JINHONG XIE* Compared with other markets, those with competing technological standards exhibit certain fundamental characteristics that make a con- sumer’s decision to adopt a new product more risky and more complex. This article examines how standards competition affects consumer behavior, an issue that has been relatively neglected by previous research in this area. The results show that consumers depend on differ- ent types of information in their adoption decisions and respond differ- ently to advertising. Specifically, the authors find that standards competi- tion motivates consumers to pay more attention to information that is comparative in nature. Thus, information about the relative (absolute) performance of a product has a stronger (weaker) impact on a product’s share in markets with standards competition (Study 1). Standards com- petition also moderates the effectiveness of different advertising formats: It strengthens the effect of comparative advertisements but weakens the effect of noncomparative advertisements (Study 2). As a result, two com- monly observed drawbacks of comparative advertisements—negative attitude toward the ad and source confusion—disappear in the presence of standards competition (Study 2), and comparative advertisements even induce greater confidence in the advertised brand (Study 3). Finally, in the presence of standards competition, the superiority of comparative advertisements is stronger when the advertised brand has a disadvan- tage in terms of brand familiarity than when it has an advantage (Study 3). This research takes a step toward a better understanding of these important but underexplored issues and provides managerial insights for firms that launch new products in markets with competing standards. The Impact of Standards Competition on Consumers: Effectiveness of Product Information and Advertising Formats With the rapid development of information technology and the digital revolution, technological standards have an increasingly important effect on the success of many new products and services, including computers, electronic video games, wireless communication, home networking, video/audio electronics, banking services, and the Internet (Katz and Shapiro 1994). A common feature of markets in which technological standards have become so important is that the consumption utility of a product or service increases with the number of people who use it. Economists call this demand interdependence “network externalities” (Farrell and Saloner 1986; Katz and Shapiro 1985) or “net- work effects” (Chou and Shy 1992). Standards competition is common in the presence of network effects because the product feature that creates the network usually requires a technical protocol, which is often patent protected. In the early stages of market development, competitors may simultaneously introduce products based on incompatible patented technologies. Standards competition may also occur either because an incumbent refuses to license its technology to a new entrant or because the cost to achieve compatibility is so high that the entrant prefers to introduce its own technology. Over the past two decades, there have been many fierce standards battles between incompatible technologies (Shapiro and Varian 1998). Some well-known examples are those for the VCR between Matsushita’s VHS and Sony’s Betamax formats, for streaming audio and video software