Some Economics of Product Standardization, Regulation, and Conformity Assessment
MUCH HAS BEEN written about the economic process through which the market generates product standards, and untold volumes have been written about government regulation of product safety, quality, and labeling. A comprehensive survey of this literature is not attempted here; this chapter will simply draw from it various ideas and principles of relevance to aspects of the technical barriers problem. The goal is to identify the reasons why heterogeneity in standards and regulations may arise across jurisdictions and, in the process, to provide insight into the positive and normative economics of heterogeneity. A further objective is to assess the need for thirdparty verification and enforcement mechanisms and the optimal design of those mechanisms.
The process of ensuring product compatibility and policing aspects of quality has always entailed a mixture of public sector and private sector initiatives. Yet great variation exists across nations in the matters that have been left to the market and those that have been subjected to regulation, and debates continue both in political assemblies and in the academy as to the appropriate role of government in regulating product characteristics.
Whatever the appropriate scope of government intervention, it is indisputable that the market alone regularly generates solutions to