Document Type

Article

Journal/Book Title/Conference

Economics Research Institute Study Paper

Volume

96

Issue

38

Publisher

Utah State University Department of Economics

Publication Date

1996

Rights

Copyright for this work is held by the author. Transmission or reproduction of materials protected by copyright beyond that allowed by fair use requires the written permission of the copyright owners. Works not in the public domain cannot be commercially exploited without permission of the copyright owner. Responsibility for any use rests exclusively with the user. For more information contact the Institutional Repository Librarian at digitalcommons@usu.edu.

First Page

1

Last Page

37

Abstract

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.

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