Economics Research Institute Study Paper
Utah State University Department of Economics
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This paper considers the private incentives of an import-competing firm and the social incentives of a technology-importing country to conform to an exogenous international standard for a product characterized by network externalities. We find that the domestic firm has an incentive to deviate from the international standard under fairly general conditions. Moreover, the social incentive of an importing country to deviate from the international standard is even greater than the private one, providing incentives to adopt and enforce technical barriers to trade. The results confirm the challenge lock-in effects pose to the international standard-setting process.
Barrett, Christopher B. and Yang, Yi-Nung, "Rational Incompatibility With International Product Standards" (1996). Economic Research Institute Study Papers. Paper 104.