Race to the bottom

Andria Myriamthopoulos and Martin Mowforth, 2009

Pollution control remains a dream in developing countries. Companies that produce goods will avoid production in countries with strict environmental regulations and will try to produce their goods in countries with less strict environmental regulations. Tietenberg (2007)[1] and Tietenburg and Lewis (2009)[2] explain that this is because they will face the problem of market share loss.

This is a good reason for countries to accept and follow lower environmental standards; which is known as the Race of the Bottom. Developed countries ‘force’ developing countries to keep environmental standards low for their economic benefit. This is not only happening in developing nations but also in weak developed countries whose economy depends mainly on the market flows of stronger countries such as the UK.

[1] Tom Tietenberg, Tradable Permits in Principle and Practice. Moving to Markets: Lessons from Twenty Years of Experience. J. Freeman and C. Kolstad. New York, Oxford University Press, 2007: 63-94.
[2] Tom Tietenberg and Lynne Lewis (2009) Environmental Economics and Policy, New Jersey: Prentice Hall.