Wednesday, November 21, 2007


Economists have usually studied standards as a war between competing technologies, e.g. Betamax versus VHS. I have something more mundane that seems to have escaped the lens of economists. I was changing the shower curtains the other day and realized that the number of rings on the curtains are standardized. Things are so much easier this way. I'm hoping that one day electrical outlets around the world will be standardized. I am curious though how standards evolved on such mundane every day things. I was reading in an issue of National Geographic (which unfortunately is not available online) that once the US had many different types of electrical outlets as well and that the government eventually mandated a standard. My guess is that in a lot of cases some governing body (or trade group) decides at some point that all these differences have to stop. What makes them decide in this manner? When do the benefits outweigh the costs? For instance, our cell phone battery chargers are all different for different phones. So are chargers for different electronics such as laptops, cameras, video cameras.

From the customer's perspective:
1. I have fewer chargers around the house.
2. When I travel I don't have to lug all these different chargers with me.
3. Fewer chargers to recycle.

From the manufacturer's perspective, won't this cut down on costs if they could all share one type of charger? Well, perhaps not. They would prefer to have the customer pay for one (although the cost is probably bundled into the phone). Is this an example of market failure? I don't think so but there are possibly some negative externalities that are not factored into the cost of the manufacturer in some way.

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