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Standardization in Decentralized Economies

April 7, 2016

Emmanuelle Auriol and Michel Benaim

Abstract: This paper presents a dynamic model, inspired by evolutionary game theory, of how standards and norms emerge in decentralized economies.It shows that standard-ization outcomes depend on adopters' attitudes to problems caused by incompati-bility.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 incompati-bility, there is neither path-dependency nor a lock-in problem, and regulation seemsa poor alternative to laissez-faire.(JEL C73, D62, LI)

Key Words: Standardization;Decentralized Economies;Quality Control