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Does Standardization Really Increase Production?

Hubert Stahn

Annals of Economics and Statistics, 1998, issue 49-50, 381-388

Abstract: In market structures with network externalities, it is often asserted that there is a natural tendency toward standardization. In this paper it is argued that incompatible products may survive in static models. Like Katz and Shapiro [1985], I develop a simple multi-product oligopoly in which the demand for one of these commodities increases with the number of agents consuming this good. Instead I introduce a variety of cost functions and discuss the limitations of their results of Katz and Shapiro and exhibit an example that reverses their conclusions.

Date: 1998
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Handle: RePEc:adr:anecst:y:1998:i:49-50:p:381-388