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Customisation vs. Standardisation: International Integration and Consumer Surplus

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  • Olivier Gaussens
  • Sophie Lecostey
  • Kiumars Shahbazi

Abstract

Our model analyses the impact of the international integration of oligopolistic markets on consumer surplus where structural differences in demand (for example, cultural differences) allow firms to engage in the international segmentation of markets. Firms consequently elect to supply either a standardised variety which yields scale economies, or a variety customised to local needs. The principal findings are firstly that integration (harmonisation of norms and standards) may reduce competition and consumer surplus; and secondly that integration may bring about a reduction of consumer surplus even where it results in an increase in competition. These results persist when the possibility of entry is introduced and suggests that systematic harmonisation of norms and standards is not necessarily desirable.

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  • Olivier Gaussens & Sophie Lecostey & Kiumars Shahbazi, 2009. "Customisation vs. Standardisation: International Integration and Consumer Surplus," Annals of Economics and Statistics, GENES, issue 93-94, pages 207-232.
    • Handle: RePEc:adr:anecst:y:2009:i:93-94:p:207-232
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    Cited by:

    1. Mohammad Movahedi & Olivier Gaussens, 2013. "Les effets de l’exportation sur l’innovation et la productivité : Analyse empirique sur un échantillon de PMI," Economics Working Paper Archive (University of Rennes & University of Caen) 201307, Center for Research in Economics and Management (CREM), University of Rennes, University of Caen and CNRS.
    2. Gaussens, Olivier & Lecostey, Sophie & Simon, Geoffray, 2011. "Intégration internationale et concurrence effective : quelques apports de la théorie de l’oligopole," L'Actualité Economique, Société Canadienne de Science Economique, vol. 87(4), pages 481-502, décembre.

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