Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/86179
Authors: 
den Butter, Frank A.G.
Groot, Stefan P.T.
Lazrak, Faroek
Year of Publication: 
2007
Series/Report no.: 
Tinbergen Institute Discussion Paper 07-090/3
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.
Subjects: 
standards
transaction costs
innovations
lock-ins
network externalities
international trade
JEL: 
L15
L16
L17
Document Type: 
Working Paper

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