Standardization in Decentralized Economies
Emmanuelle Auriol, Michel Benaim
American Economic Review · 2000 · Volume 90 · Issue 3
Abstract
This paper presents a dynamic model, inspired by evolutionary game theory, of how standards and norms emerge in decentralized economies. It shows that standardization outcomes depend on adopters' attitudes to problems caused by incompatibility. If individuals display aversion to incompatibility, standardization never fails to happen eventually, but societies sometimes end up picking inferior standards. In this case, official action can be useful to quickly achieve sensible standardization. On the other hand, when individuals display tolerance or neutrality to incompatibility, there is neither path-dependency nor a lock-in problem, and regulation seems a poor alternative to laissez-faire.
Keywords
Information and Product Quality, Standardization and Compatibility
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