VOTING ON STANDARDIZATION

This paper analyses equilibria of voting on commodity standards within the framework of a Farrell-Saloner model which takes into considerati on the trade-off between network effects and losses from a reduction o f variety. Social welfare implications are derived and discussed with respect to manipulations of majority rules. The findings indicate that welfare implications of standards are highly sensitive to the decisio n procedure and that the choice of the decision rule is non-trivial as it can at least prevent worst outcomes if not guarantee optimal resul ts.