❑Ethics in the Market Place

❖Perfect Competition :
A free market in which no buyer or seller has the power to significantly
affect the prices at which goods are being exchanged.

▪Perfectly Competitive Free Markets are characterized by the

following 7 features:
• There are numerous buyers and sellers, none of whom has a
substantial share of the market.

•All buyers and sellers can freely and immediately enter or leave the
market.
•Every buyer and seller has full and perfect knowledge of what
every other buyer and seller is doing, including knowledge of prices,
quantities, and quality of all goods being bought and sold.

•The goods being sold in the market are so similar to each other that no
one cares from which each buys or sells.

•The costs and benefits of producing or using the goods being

exchanged are borne entirely by those buying or selling the goods and
not by any other external parties.

•All buyers and sellers are utility maximizers. Each tries to get as much
as possible for as little as possible.

•No external parties(such as government) regulate the price, quantity, or

quality of any of the goods being bought and sold in the market.
❖Moral Outcomes of Perfectly Competitive Markets:

▪Achieve a certain kind of justice.

▪Satisfy a certain version of utilitarianism(The essence of the Utilitarianism can be
read : In deciding what to do , we should, therefore, ask what course of conduct
would promote the greatest amount of happiness for all those who will be
affected).

▪Respect certain kinds of moral rights.

❖Pure Monopoly:
A market in which a single firm is the only seller in the market and which new
sellers are barred from entering.

❖Monopoly Market Characteristics:

▪One Seller
▪High Entry Barriers
▪Quantity below Equilibrium
▪Prices above equilibrium and Supply Curve
▪Can extract monopoly profit.
❖Oligopoly :
A market shared by a relatively small number of large firms that together
can exercise some influence on process.

➢Main Views of Oligopoly Power:

▪Do-Nothing View
▪Anti trust View
▪Regulation View

❖Unethical Practices in Oligopoly Industries:

▪Price – Fixing
▪Manipulation of supply
▪Exclusive dealing arrangements
▪Tying Arrangements
▪Retail Price Maintenance Agreements
▪Price Discrimination
❑Major Rights of Consumers :
John F. Kennedy had equated the rights of the ordinary American
consumer with national interest. He gave the American consumer four
basic rights:

▪The Right to Safety - to be protected against the marketing of goods

which are hazardous to health or life.

▪The Right to Choose - to be assured, wherever possible, access to a

variety of products and services at competitive prices: and in those
industries where competition is not workable and Government regulation is
substituted, an assurance of satisfactory quality and service at fair prices.

▪The Right to Information - to be protected against fraudulent, deceitful

or grossly misleading information, advertising, labeling, or other practices,
and to be given the facts she / he needs to make an informed choice.

▪The Right to be Heard - to be assured that consumer interests will

receive full and sympathetic consideration in the formulation of
Government policy, and fair and expeditious treatment in its administrative
tribunals.
➢Consumer rights can also be classified in the
following way :

1. Basic Needs
2. Safety
3. Information
4. Choice
5. Representation
6. Redress(rectify)
7. Consumer Education and
8. Healthy Environment.
❖Guidelines for Marketing Ethics :

▪Advertising standards

▪Customer service

▪Pricing

▪Product development

▪Distributor relations

▪General code of ethics