Name: Khoirunnida Yasmin

Student ID: 21311338/ Management IP

Subject: Islamic Business Ethics (Resume chapter 6)

Ethics in The Market

 Perfect Competition Market

In economic theory, perfect competition means that all firms sell the same
product, market share does not affect prices, firms can enter or exit without barriers,
buyers have perfect or perfect information, firms Occurs when the price cannot be set.
In the market, of course, there is competition because there are many buyers and few
sellers. The first type of competition is perfect competition. The following are
characteristics of a perfectly competitive market:
1. All sellers and buyers have perfect knowledge of the market. All
information is transparent based on raw material, price, and profit
availability. so that people can compete there we do our best with each
resource. Unlike the market where the mafia is, hidden information.
2. Products sold in a perfectly competitive market are equal and no product is
better than another, so that competition can be healthy.
3. Items sold must not contain trademarks, brands, or be generically referred
to as merchandise.
4. All costs and profits are the result of buying and selling, no one is the price
maker, all sellers and buyers act as a price taker.
5. Both sellers and buyers want to maximize their satisfaction, usefulness, or
realistic profit. So, the buyer wants to buy the goods at the lowest price,
while the seller wants to get the maximum profit.
6. There are no outside parties to interfere with the market, including
governments. Interference is not permitted as doing so would harm one of
the parties (seller or buyer).
7. Many sellers and buyers
8. All sellers and buyers can enter and exit the market freely, with no barriers
or regulations.
 - Law of demand and supply

The law of supply and demand is the theory that prices are determined by the
relationship between supply and demand. If the supply of a good or service
exceeds demand, the price will fall. If demand exceeds supply, prices will rise.
The law of supply states that when prices rise, companies see more profit potential
and increase the supply of goods and services. The law of demand states that
when prices rise, customers buy less.
There are 3 moral values in perfect competition:
a) Fair
b) Maximizes satisfaction
c) Respect the rights of buyers
 Oligopoly
The definition of an authoritarian market or what is often called a cartel is
when there are a lot of buyers, but only a few sellers, 2-10 to be exact. This kind of
competition can undermine morals. When one company sets a price, others respond in
ways that keep their customers buying. For example, if an airline reduces ticket
prices, other players often follow. However, because the level of competition is still
relatively low compared to a free market with many players, prices are often higher
than those of perfect competition.
 Monopoly
A monopoly is when one company produces a good with no close substitutes,
while a monopoly is when a relatively large number of firms produce the same, but
slightly different, good. In both cases, significant barriers to entry prevent other firms
from competing. Once a monopoly is established, a lack of competition can cause
 sellers to charge high prices. The monopoly firm is the price maker. This means they
determine the cost at which their product is sold. This price is subject to change at any
time. Monopolies also reduce the choice available to buyers. A monopoly becomes a
pure monopoly when there are absolutely no substitutes.
If monopoly is dzolim or harmful, then we must stop it. However, it is very
rare or non-existent practice exclusively without harm. Because their goal is definitely
to dominate the market. So, whenever there is monopolistic behavior, the government
will immediately stop it without husnudzon or have good thoughts again. This is why
the government also has its own team to monitor competition in the market, in
particular the Business Competition Oversight Committee.
 Islamic view

ِ َ‫ٰيٓاَيُّهَا الَّ ِذي َْن ٰا َمنُ ْوا اَل تَْأ ُكلُ ْٓوا اَ ْم َوالَ ُك ْم بَ ْينَ ُك ْم بِ ْالب‬
‫اط ِل آِاَّل اَ ْن‬
‫تَ ُك ْو َن تجارةً َع ْن تَراض م ْن ُكم ۗ واَل تَ ْقتُلُ ْٓوا اَ ْنفُس ُكم ۗ ا َّن هّٰللا‬
َ ِ ْ َ َ ْ ِّ ٍ َ َ َ ِ
‫ان ِب ُك ْم َر ِح ْي ًما‬َ ‫َك‬
“Oh, you who believe! Do not eat each other's property in a false way (not true),
except in trade which is carried out based on consensual between you. And don't kill
yourself. Indeed, Allah is Most Merciful to you.” An-Nisa:29

If it is revoked in an exclusive case, the buyer certainly not like or displeased

when all the sellers raise the price of the goods they need for no reason. In a
monopoly, the buyer will not feel happy or satisfied when the seller acts arbitrarily for
him know that buyers need it. Furthermore, whatever is forbidden or forbidden in
Islam, the purpose must maintain Shariah in 5 maqashid, namely:
1) Hifdz Ad-Din, to maintain religion
2) Hifdz An Nafs, to nourish the soul
3) Hifdz Al 'Aql, for spiritual nourishment
4) Hifdz An Nasb, to sustain the offspring
5) Hifdz Al-Maal, to maintain property
 Judging from the maqashid sharia, the practice of monopoly or cartel and
exclusivity is an exaggeration because it may endanger property.