Final answer:
The degree of standardization is a crucial factor in the international market for industrial goods, as it can either raise production costs when non-harmonized or facilitate trade with common standards.
Step-by-step explanation:
One of the most significant factors affecting the international market for industrial goods and services is indeed the degree of standardization. Standardization refers to the process of establishing and applying rules for a uniform identification of the characteristics of products, which includes their quality, performance, safety, and dimensions, as well as the terms under which they are provided.
In the context of international trade, standardization can lead to an increase in production and operating costs for exporting countries, especially smaller ones, as they try to meet differing standards across countries. This can lead to a shift in the supply curve resulting in decreased exports and increased prices of goods, such as toys. Tariffs similarly raise prices by restricting imports, leading to higher costs. However, a harmonized standard across countries—often considered a "first best" policy—can create a more level playing field and reduce these inefficiencies, tackling the problem at its source.
Therefore, while the rules of international trade do not require that all nations impose the same consumer safety standards, establishing a common set of standards can aid in facilitating trade, aligning production costs, and maintaining fair competition. Such standards should be non-discriminatory, based on science, and not arbitrarily applied, ensuring equal treatment for both foreign and domestic companies.