Standardization policy and international trade

Neil Gandal, Oz Shy

Research output: Contribution to journalArticlepeer-review

Abstract

We analyze governments' incentives to recognize foreign standards when there are potentially both network effects and conversion costs. When government policy is limited to either recognizing all foreign standards or not recognizing any foreign standard, recognition is always the outcome. We then consider a setting in which countries can form standardization unions. When conversion costs are relatively large, two countries can increase their welfare by forming a standardization union that does not recognize the standard of the third (nonmember) country. When network effects are significant, all countries mutually recognize all standards and have no incentives to form standardization unions.

Original languageEnglish
Pages (from-to)363-383
Number of pages21
JournalJournal of International Economics
Volume53
Issue number2
DOIs
StatePublished - 2001

Keywords

  • International trade
  • Network effects
  • Standardization policy
  • Trade policy

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