This website uses cookies.

By clicking the "Accept" button or continuing to browse our site, you agree to first-party and session-only cookies being stored on your device to enhance site navigation and analyze site performance and traffic. For more information on our use of cookies, please see our Privacy Policy.

  1. Home
  2. Journals
  3. American Economic Review
  4. June 2000
  5. Standardization in Decentralized Economies

American Economic Review

ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)

Standardization in Decentralized Economies

  • Emmanuelle Auriol
  • Michel Benaim
American Economic Review
vol. 90, no. 3, June 2000
(pp. 550–570)
Download Full Text PDF

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.

Citation

Auriol, Emmanuelle, and Michel Benaim. 2000. "Standardization in Decentralized Economies." American Economic Review, 90 (3): 550–570. DOI: 10.1257/aer.90.3.550

JEL Classification

  • L15 Information and Product Quality; Standardization and Compatibility