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The Transaction Costs Perspective on Standards as a Source of Trade and Productivity Growth

Author

Listed:
  • Frank A.G. den Butter

    (VU University Amsterdam)

  • Stefan P.T. Groot

    (VU University Amsterdam)

  • Faroek Lazrak

    (VU University Amsterdam)

Abstract

This 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.

Suggested Citation

  • Frank A.G. den Butter & Stefan P.T. Groot & Faroek Lazrak, 2007. "The Transaction Costs Perspective on Standards as a Source of Trade and Productivity Growth," Tinbergen Institute Discussion Papers 07-090/3, Tinbergen Institute.
    • Handle: RePEc:tin:wpaper:20070090
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    File URL: https://papers.tinbergen.nl/07090.pdf
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    References listed on IDEAS

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    Cited by:

    1. Frank A.G. den Butter, 2010. "Transaction Management: Value Creation by Reducing Transaction Costs," Tinbergen Institute Discussion Papers 10-051/3, Tinbergen Institute.
    2. Hao Zhang & Jiadong Jiang & Liwei Zheng & Xiangzhen Li, 2019. "The interaction between standards development and economic growth of China," International Journal of Quality Innovation, Springer, vol. 5(1), pages 1-13, December.

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    More about this item

    Keywords

    standards; transaction costs; innovations; lock-ins; network externalities; international trade;
    All these keywords.

    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

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