International Labour Standards and Product Differentiation (original) (raw)

In the last decades the interaction between Labour Standards and International Trade has assumed new importance. We use an incentive based-approach to assess the e¢ ciency of trade policy instruments and private schemes for the promotion of international labour standards in Southern Firms. We show that trade policy instruments may implement minimum standards. On the other hand, we …nd that private schemes may overcome minimum standards if and only if there is an exclusive contract between the MNE and the Southern …rm, due to free-riding e¤ect.