Scandinavian Working Papers in Economics

SSE/EFI Working Paper Series in Economics and Finance,
Stockholm School of Economics

No 254: Mutual Recognition and the Strategic Use of International Standards

Klaus Wallner
Additional contact information
Klaus Wallner: SITE - Stockholm Institute of Transition Economics and East European Economies, Postal: Stockholm School of Economics, P.O. Box 6501, S-113 83 Stockholm, Sweden

Abstract: This paper considers domestic product standards that do not raise the willingness to pay by consumers but increase the costs for foreign suppliers of serving the market. It is shown in a Cournot triopoly model that such standards can be used as strategic tool to raise domestic welfare by creating asymmetry between local and foreign producers. A country can raise its welfare by concluding mutual recognition agreements with a strict subset of its trading partners. In that case exclusively the largest countries agree on mutual recognition of their home standards, to the detriment of the country with the smaller home market.

Keywords: Product standards; non-tariff barriers; mutual recognition

JEL-codes: F13; F15

23 pages, August 19, 1998

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