This paper analyses equilibria of voting on commodity standards within the framework of a Farrell-Saloner model which takes into consideration the trade-off between network effects and losses from a reduction of 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 decision procedure and that the choice of the decision rule is non-trivial as it can at least prevent worst outcomes if not guarantee optimal results.
KeywordsSocial Welfare Decision Rule Optimal Result Public Finance Majority Rule
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