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Competing Industrial Standards and the Impact of Trade Liberalization

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  • Kikuchi, Toru
  • Iwasa, Kazumichi

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 consists 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' 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.

Suggested Citation

  • Kikuchi, Toru & Iwasa, Kazumichi, 2008. "Competing Industrial Standards and the Impact of Trade Liberalization," MPRA Paper 8802, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:8802
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    References listed on IDEAS

    as
    1. Chou, Chien-fu & Shy, Oz, 1990. "Network effects without network externalities," International Journal of Industrial Organization, Elsevier, vol. 8(2), pages 259-270, June.
    2. Gandal, Neil & Shy, Oz, 2001. "Standardization policy and international trade," Journal of International Economics, Elsevier, vol. 53(2), pages 363-383, April.
    3. Chou, Chien-fu & Shy, Oz, 1996. "Do consumers gain or lose when more people buy the same brand," European Journal of Political Economy, Elsevier, vol. 12(2), pages 309-330, September.
    4. Toru Kikuchi, 2007. "Network Externalities And Comparative Advantage," Bulletin of Economic Research, Wiley Blackwell, vol. 59(4), pages 327-337, October.
    5. Lembke Johan, 2002. "Global Competition and Strategies in the Information and Communications Technology Industry: A Liberal-Strategic Approach," Business and Politics, De Gruyter, vol. 4(1), pages 1-30, April.
    6. Lembke, Johan, 2002. "Global Competition and Strategies in the Information and Communications Technology Industry: A Liberal-Strategic Approach," Business and Politics, Cambridge University Press, vol. 4(1), pages 41-69, April.
    7. Kazumichi Iwasa & Toru Kikuchi, 2011. "Software Provision and the Impact of Market Integration," Review of International Economics, Wiley Blackwell, vol. 19(4), pages 685-696, September.
    8. Toru Kikuchi, 2005. "Interconnected communications networks and home market effects," Canadian Journal of Economics, Canadian Economics Association, vol. 38(3), pages 870-882, August.
    9. Iwasa, Kazumichi & Kikuchi, Toru, 2008. "Software Provision and the Impact of Market Integration: A Note," MPRA Paper 9315, University Library of Munich, Germany.
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    Full references (including those not matched with items on IDEAS)

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    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation

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