Customisation vs. standardisation, international integration and consumer surplus

Our model analyses the impact of the international integration of oligopolistic markets on consumer surplus when structural differences in demand (for example, cultural differences) allow firms to engage in the international segmentation of markets. Firms consequently elect to supply either a standardised variety which yields scale economies, or a variety customised to local needs. The principal findings are: - that integration (harmonisation of norms and standards) may reduce competition and consumer surplus; - that integration can bring about a reduction of consumer surplus even when it results in an increase in competition. These results persist when the possibility of entry is introduced and suggests that systematic harmonisation of norms and standards is not necessarily desirable