Does Standardization Really Increase Production?

In market structures with network externalities, it is often asserted that there is a natural tendency toward standardization. In this paper it is argued that incompatible products may survive in static models. Like Katz and Shapiro [1985], I develop a simple multi-product oligopoly in which the demand for one of these commodities increases with the number of agents consuming this good. Instead I introduce a variety of cost functions and discuss the limitations of their results of Katz and Shapiro and exhibit an example that reverses their conclusions.