Requiring a firm with international operations to follow the standards of its ho

Question

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 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. it shifts the costs of improved standards to firms and consumers in high-income countries. 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. it avoids the problems of high incomes countries dictating what standards are to be used. In this situation, firms that cross national boundaries must conform to whichever standards are higher. it is a comprehensive measure, since it addresses the problem of production in foreign firms as well as firm from high-standards countries that relocate abroad.

Explanation / Answer

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,

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

because if the firm is following the standard of home country, then it can’t address the problem of production in the foreign firm, as foreign firm following the standard of foreign country.

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