Product Standards Coalitions in a Market without Borders

Traditional analyses of standards in international trade identify standards as government regulations and investigate the potential for distortion of trade flows. In reality, however, private industry groups exercise critical influence on the determination of technical standards. The composition of these groups is affected by technology and market conditions, and in an integrated market the alliances of private firms are likely to cross national boundaries, generating harmonization ‘from the bottom’. If standards are public goods whose ideal value differs across economic activities and across countries, economic integration should bring increased harmonization across countries and finer differentiation across products. Empirical evidence from the United States and the European Union, although mostly anecdotal, supports this prediction.