Globalization and Standards: The Logic of Two-Level Games

Abstract

The emergence of a global information architecture has fueled regulatory competition among nations and regions to set information and communication technology (ICT) standards. Such regulatory competition can be thought of as a two level game: level one is competition to set ICT standards within a nation or region; level two is competition to set the global ICT standards with reference to local standards. The United States and the European Union are global leaders in setting ICT standards, and compete to set global ICT standards based on different local regulatory cultures: the U.S. is a “liberal market economy” (LME) within which informal standard developing processes are perceived as legitimate, while formal standard developing processes are perceived as legitimate within the “coordinated market economies” (CME) that tend to dominate EU regulation. In recent decades, informal ICT standard setting organizations (SDOs) known as consortia, which are more narrowly focused and less transparent than traditional SDOs have emerged in the U.S. and have come to dominate global ICT regulatory competition. Standards for Radio Frequency Identifiers (RFID) provide an example that illustrates this trend. EU regulators now are considering what changes may be needed in the EU system of harmonizing standards and EU regulation in order to reverse this trend. If EU regulators succeed in engaging with selected ICT standards consortia, this might permit CME regulation to prevail over LME regulation in competition to set global ICT standards.

Keywords: information and communication technologies, regulatory competition, standard developing organization