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Competing Industrial Standards and the Impact of Trade Liberalization

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  • Toru Kikuchi
  • Kazumichi Iwasa

Abstract

The main purpose of this study is to illustrate, with simple trade theory, the relationship between competing industrial standards and trade liberalization. We assume that there are two competing industrial standards in an international context, each of which applies to a group of differentiated products. A product can be used only in combination with other products based on the same industrial standard. We examine the impact of trade liberalization (i.e., a decline in trade costs) on consumers' choice of a standard. It will be shown that the degree of indirect network effects, captured with substitution between differentiated products, plays an important role as a determinant of the impact of trade liberalization.

Suggested Citation

  • Toru Kikuchi & Kazumichi Iwasa, 2011. "Competing Industrial Standards and the Impact of Trade Liberalization," International Economic Journal, Taylor & Francis Journals, vol. 25(2), pages 269-284.
    • Handle: RePEc:taf:intecj:v:25:y:2011:i:2:p:269-284
    DOI: 10.1080/10168737.2011.587380
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    References listed on IDEAS

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    1. Gandal, Neil & Shy, Oz, 2001. "Standardization policy and international trade," Journal of International Economics, Elsevier, vol. 53(2), pages 363-383, April.
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    More about this item

    Keywords

    Competing industrial standards; trade liberalization;

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation

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