Financing the Standards Development Process

Michael B. Spring, University of Pittsburgh, and Martin B.H. Weiss, University of Pittsburgh

1/01/2005
(Original Publish Date: 5/25/1994)

Over the last several years, economists have studied the impact of standards on market dynamics. Recently, there has been increased attention to standards as barriers to free trade. The Office of Technology Assessment has suggested a variety of policy level concerns, including trade related matters, and suggests that in part the issues may be based on the U.S. approach to funding standards. Weiss and Toyofuku examined the costs and benefits of standards development with an eye to determining who bears the majority of the costs and who derives the most significant benefits. This paper proposes and demonstrates a framework for examining the financing of the standards process. This analysis examines the types of costs borne by different participants and the benefits they receive from participation. This qualitative analysis provides a framework for subsequent quantitative analysis. Thus, the primary objective of this paper is to set the stage for more detailed cost/benefit analyses. The paper concludes with an analysis of current funding strategy and proposes alternative strategies for financing. In developing alternative funding strategies we seek to distinguish those aspects of the standards process that are best left to private financing from those aspects which will be under-provided by privately financed strategies suggesting some role for government.