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

Toru Kikuchi and Kazumichi Iwasa

No 913, Discussion Papers from Graduate School of Economics, Kobe University

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 consumers f 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.

Pages: 31pages
Date: 2009-08
New Economics Papers: this item is included in nep-int and nep-net
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