Some Economic Effects of Standards

Standards may be used to increase market efficiency when markets fail. The market for standards, however, may fail since standards are a public good and producers and consumers may use standards to entrench or extend their market power. Using a sample of 252 products, standard usage was found to be a function of buyer and seller concentration, the importance of product quality for health and safety, the elasticity of demand, product complexity, research nd development (R & D) and advertising intensity and whether the product was a producer or consumer good. Standards affected product cost and price, the location of production and product availability.