Ask HN: Why do freelance sites tend to race to the bottom and not the middle?

This is probably a naive question but would love to hear some HNer insight on this one.<p>While pondering the prices being charged by many contractors on sites like oDesk and Freelancer and reading many people saying that marketplaces like these are a &#x27;race to the bottom&#x27;, a thought occurred to me.<p>If these sites are meant to make the market global (and thus a person in say, India, with an Internet connection and talent should be no different to a person in the US, with an Internet connection and equal talent), why didn&#x27;t &#x2F; why don&#x27;t firms in places like India bring their prices UP to the higher rates generally charged by people living where expenses are higher?<p>I see the argument that contractors living in countries where the living expenses are low can afford to charge less, but why would they?<p>I know why they would _now_, because the trap has already been set. But why did it end up like that? Why didn&#x27;t people see it as an opportunity to ask for more (as in some thought process like: &quot;this site makes me equivalent to a US contractor, so I can now charge as much&quot;).<p>I realise there&#x27;s probably a lot in this question; I&#x27;m NOT singling out any countries in particular certainly and I know there&#x27;s definitely generalizations here (not all contractors from such places charge low amounts).<p>It makes me curious what would happen if there was a freelancer site that totally anonymized which countries its&#x27; contractors were based in; would this affect prices in the market? (as buyers wouldn&#x27;t have an expectation of a lower price point depending on where you were, if that is in fact a reason).