The Transaction Costs Perspective on Standards as a Source of Trade and Productivity Growth
AbstractThis paper discusses the design, implementation and use of standards from the perspective of transaction costs economics. A proper design and implementation of standards may lead to a considerable reduction of transaction costs, which enhances trade and, consequently, economic welfare. A major example is the use of containers, which has drastically changed the worldwide transport infrastructure, and lowered the costs of transport of goods considerably. The example of containers also shows that network externalities play a major role in the use of standards, and that, on the other hand, worldwide standards with large sunk investment costs may lead to a lock-in. This may call for government intervention in the design and use of standards, and in the transition processes to new standards. The paper provides ample further examples of standards and on the role of the government, or clubs, with respect to these standards.
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Bibliographic InfoPaper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 07-090/3.
Date of creation: 23 Nov 2007
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standards; transaction costs; innovations; lock-ins; network externalities; international trade;
Find related papers by JEL classification:
- L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
- L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
- L17 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Open Source Products and Markets
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-02-23 (All new papers)
- NEP-INT-2008-02-23 (International Trade)
- NEP-NET-2008-02-23 (Network Economics)
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