Consider a simplified version of the model of international standardization described in Section 4.3.2. Suppose that brand I oriented consumers reside only in country B, whereas n brand 2 oriented consumers live only in country A. Thus, the population of each country is and they prefer the product operating on the standard produced in the other country. Answer the following questions.

(a) Suppose that both countries recognize all standards. Calculate the UPE prices in an equilibrium where firm 1 (located in country A) sells to brand 1 oriented consumers who reside in country B; and where firm 2 (located in country B) sells to brand 2 oriented consumers who reside in country A.

(b) Calculate the profit level of each firm and the utility level of each consumer in this equilibrium.

(c) Calculate the social welfare of each country under mutual recognition.

(d) Suppose that that both countries do not recognize foreign standards. Calculate the price charged by each firm and the resulting profit level.

(e) Calculate the utility gained by each consumer and the social welfare on mutual nonrecognition.

(f) Conclude whether countries are better off by recognizing or not recognizing foreign standards. Explain your result.