The economics of standards and trade

We live in a world profoundly reliant on product standards. Faxes can be sent around the world because fax machines obey a common protocol. Computer files can be shared because computers employ various standardized hardware and software formats. The need for product standards is not a new phenomenon. In biblical times, the lack of a common (standardized) language wreaked havoc at the Tower of Babel (Shapiro, 2000). In more recent times, during the great Baltimore fire of 1904, fire fighters called in from neighbouring cities were unable to fight the blaze effectively because their hoses would not fit the hydrants in Baltimore.