ETHICS IN THE

MARKETPLACE

Business Ethics-School of ManagementAndalas University

ETHICS IN THE
MARKETPLACE
Competition is part of the free

enterprise system.
Competition tends to produce
efficiency in the market and
benefits the general consumer
by resulting in a variety of
goods at the best prices.
We shall examine just a few of
the areas where the
temptations to act immorally
are significant, and where
some practices are morally
questionable.

Definition of Market

A forum in which people come together to

exchange ownership of goods; a place where
goods or services are bought and sold.

Models of Market Competition

Ethical Weaknesses of Monopolies

Violates capitalist justice.

charging

more for products than producer knows

they are worth

Violates utilitarianism.
keeping

resources out of monopoly market and

diverting them to markets without such shortages
removing incentives to use resources efficiently

Violates negative rights.

forcing other companies to stay out of the market

letting monopolist force buyers to purchase goods they do not want

letting monopolist make price and quantity decisions that consumer is

forced to accept

Unethical Practices in
Oligopolistic Markets

Price-fixing
Manipulation of supply
Market allocation
Bid rigging
Exclusive dealing arrangements
Tying arrangements
Retail price maintenance agreements
Predatory price discrimination.

The Fraud Triangle

The pressures or strong incentives to do

wrong, such as organizational pressure, peer
pressure, company needs, personal
incentives
The opportunity to do wrong, which includes
the ability to carry out the wrongdoing, being
presented with circumstances that allow it,
low risk of detection
The ability to rationalize ones action by
framing it as morally justified.

Main Views on Oligopoly

Power

Do-nothing view.

Do nothing since power of oligopolies is limited

by competition between industries and by
countervailing power of large groups

Antitrust view.
Large

monopoly and oligopoly firms are

anticompetitive and should be broken up into
small companies

Regulation view.
Big

companies are beneficial but need to be

restrained by government regulation.