Question

What is the “race to the bottom” scenario?

Short answer

A race to the bottom is a highly competitive environment in which a corporation, state, or nation tries to undercut the competition's pricing by lowering standards of quality or worker safety or cutting labor expenses.

Step-by-step solution

Concept of a regulatory 

The notion of a regulatory "race to the bottom" first appeared in the United States in the late 1800s and early 1900s, when states competed for charters to lure firms to set up shop in their territory.

Importance of race to the bottom 

The race to the bottom theory is primarily concerned with globalization and emerging nations' admission into the global market. The theory is that as lower-cost nations become more integrated into the global economy, international commerce and investment will flow more freely to them.