The Race to the Bottom, From the Bottom
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The dominant perspective in discussions of labor 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 on standards, which can begin to provide insights into
some key questions. A Southern race to the bottom is possible but not inevitable. It
depends intricately on the Northern demand curve, the size of big exporters relative to
each other, and the relative size of the competitive fringe of small exporters { a precise
and complete characterization is developed in the paper. The paper also analyzes the
e®ect of Northern tari®s on Southern strategic competition in standards. It is shown
that Northern trade protectionism undermines Southern standards.