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Competing Industrial Standards and the Impact of Trade Liberalization:Revised and Enlarged

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Author Info
Toru Kikuchi () (Graduate School of Economics, Kobe University)
Kazumichi Iwasa (Kyoto Institute of Economic Research, Kyoto University)

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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 consumersf 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.

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File URL: http://www.econ.kobe-u.ac.jp/RePEc/koe/wpaper/2009/0913.pdf
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Paper provided by Graduate School of Economics, Kobe University in its series Discussion Papers with number 0913.

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Length: 31pages
Date of creation: Aug 2009
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Handle: RePEc:koe:wpaper:0913

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  1. Church, Jeffrey & Gandal, Neil, 1992. "Network Effects, Software Provision, and Standardization," Journal of Industrial Economics, Blackwell Publishing, vol. 40(1), pages 85-103, March. [Downloadable!] (restricted)
  2. Toru Kikuchi, 2007. "Network Externalities And Comparative Advantage," Bulletin of Economic Research, Blackwell Publishing, vol. 59(4), pages 327-337, October. [Downloadable!] (restricted)
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  3. Toru Kikuchi, 2005. "Interconnected communications networks and home market effects," Canadian Journal of Economics, Canadian Economics Association, vol. 38(3), pages 870-882, August. [Downloadable!] (restricted)
  4. Farrell, Joseph & Klemperer, Paul, 2007. "Coordination and Lock-In: Competition with Switching Costs and Network Effects," Handbook of Industrial Organization, Elsevier. [Downloadable!] (restricted)
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  5. Chou, Chien-fu & Shy, Oz, 1996. "Do consumers gain or lose when more people buy the same brand," European Journal of Political Economy, Elsevier, vol. 12(2), pages 309-330, September. [Downloadable!] (restricted)
  6. repec:bep:buspol:4:2002:1:41-69 is not listed on IDEAS
  7. Neil Gandal, 2002. "Compatibility, Standardization, and Network Effects: Some Policy Implications," Oxford Review of Economic Policy, Oxford University Press, vol. 18(1), pages 80-91, Spring.
  8. Dixit, Avinash K & Stiglitz, Joseph E, 1977. "Monopolistic Competition and Optimum Product Diversity," American Economic Review, American Economic Association, vol. 67(3), pages 297-308, June. [Downloadable!] (restricted)
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