Template-Type: ReDIF-Paper 1.0
Series: Tinbergen Institute Discussion Papers
Creation-Date: 2007-11-23
Number: 07-090/3
Author-Name: Frank A.G. den Butter
Author-Email: fbutter@feweb.vu.nl
Author-Workplace-Name: VU University Amsterdam
Author-Name: Stefan P.T. Groot
Author-Workplace-Name: VU University Amsterdam
Author-Name: Faroek Lazrak
Author-Workplace-Name: VU University Amsterdam
Title: The Transaction Costs Perspective on Standards as a Source of Trade and Productivity Growth
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.
Classification-JEL: L15; L16; L17
Keywords: standards; transaction costs; innovations; lock-ins; network externalities; international trade
File-Url: https://papers.tinbergen.nl/07090.pdf
File-Format: application/pdf
File-Size: 224939 bytes
Handle: RePEc:tin:wpaper:20070090