The Race to the Bottom, from the Bottom
Nancy H. Chau
Cornell University - School of Applied Economics and Management; Institute for the Study of Labor (IZA)
Cornell University - School of Applied Economics and Management; Centre for Economic Policy Research (CEPR); Institute for the Study of Labor (IZA)
Economica, Vol. 73, No. 290, pp. 193-228, May 2006
The dominant perspective in discussions of labour and environmental standards and globalization is that of North-South competition and its impact on Northern standards. This paper presents an alternative perspective, that of South-South competition to export to the North and its impact on Southern standards. It develops a simple model of Southern competition, and demonstrates that whether a Southern race to the bottom is possible depends intricately on the Northern demand curve, the size of large exporters relative to each other and the relative size of the competitive fringe of small exporters. The possibility that Northern trade protectionism may undermine Southern standards is also examined.
Number of Pages in PDF File: 36Accepted Paper Series
Date posted: May 8, 2006
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