Requiring a firm with international operations to follow the standards of its home country instead of those of the foreign country has all of the following advantages EXCEPT

A) it takes care of the fear of a race-to-the-bottom by making it impossible for a home-based company to exploit low standards.
B) it shifts the costs of improved standards to firms and consumers in high-income countries.
C) it removes the threat of domestic firms relocating abroad for low standards and ensures that any relocation that takes place is due to foreign comparative advantage.
D) it avoids the problems of high-income countries dictating what standards are to be used. In this situation, firms that cross national boundaries must conform to whichever standards are higher.
E) it is a comprehensive measure, since it addresses the problem of production in foreign firms as well as firms from high-standards countries that relocate abroad.


Ans: E) it is a comprehensive measure, since it addresses the problem of production in foreign firms as well as firms from high-standards countries that relocate abroad.

Economics

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