Abstinence from Child Labor and Profit Seeking
Abstract
Some firms voluntarily abstain from using child labor, presumably in response to concerns about the welfare of overseas child workers. These firms do not, however, support banning the imports of competitors’ products manufactured with child labor. As an explanation of this seemingly contradictory behavior, I consider a setting in which two firms engage in Bertrand competition for consumers who vary in the value they place on goods made without child labor. When the firms differentiate themselves according to their labor input, both enjoy greater profits. If imports using child labor are banned, this reduces the profits of both firms. Similar results can also arise in a many firm setting. If charitable donations to education foundations raise the cost of child labor, this too can arise as a purely profitseeking activity by adult labor firms. Thus, while the adult-labor firms engage in seemingly altruistic behavior, they may do so not out of regard for children but rather for their own profits.Download Info
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Paper provided by University of Oregon Economics Department in its series University of Oregon Economics Department Working Papers with number 2000-1.Length: 27
Date of creation: 01 Jul 2000
Date of revision: 01 Aug 2002
Handle: RePEc:ore:uoecwp:2000-1
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Related research
Keywords: Child labor; product differentiation;Other versions of this item:
- Davies, Ronald B., 2005. "Abstinence from child labor and profit seeking," Journal of Development Economics, Elsevier, vol. 76(1), pages 251-263, February.
- L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
- L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm
- J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
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Citations
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.Cited by:
- Matthias Doepke & Fabrizio Zilibotti, 2009.
"Do International Labor Standards Contribute to the Persistence of the Child Labor Problem?,"
NBER Working Papers
15050, National Bureau of Economic Research, Inc.
- Matthias Doepke & Fabrizio Zilibotti, 2010. "Do international labor standards contribute to the persistence of the child-labor problem?," Journal of Economic Growth, Springer, vol. 15(1), pages 1-31, March.
- Matthias Doepke & Fabrizio Zilibotti, 2010. "Do international labor standards contribute to the persistence of the child labor problem?," IEW - Working Papers 467, Institute for Empirical Research in Economics - University of Zurich.
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- Eric Edmonds, 2007.
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- Jean Marie Baland & Cedric Duprez, 2008.
"Are Fair Trade Labels Effective Against Child Labor?,"
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- Fanelli, Domenico, 2008. "A Two-Stage Duopoly Game with Ethical Labeling and Price Competition when Consumers differ in Preferences," MPRA Paper 11544, University Library of Munich, Germany.
- Fanelli, Domenico, 2010. "The Role of Socially Concerned Consumers in the Coexistence of Ethical and Standard Firms," MPRA Paper 20117, University Library of Munich, Germany.
- Kaushik Basu & Homa Zarghamee, 2008. "Product boycott a good idea for controlling child labor? A theoretical investigation," Indian Statistical Institute, Planning Unit, New Delhi Discussion Papers 08-09, Indian Statistical Institute, New Delhi, India.
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