Price Leader Firms may, without ever discussing it explicitly, realize that competition is not in their collective best interests. Therefore, they may recognize one firm as the "price leader“, raising their prices in reaction when the leader decides to do so. No matter how prices are set, however, clearly social utility declines when prices are artificially raised. Firms may, without ever discussing it explicitly, realize that competition is not in their collective best interests. Therefore, they may recognize one firm as the "price leader“, raising their prices in reaction when the leader decides to do so. No matter how prices are set, however, clearly social utility declines when prices are artificially raised.

Bribery In the late 70S’ it was discovered that huge bribes are paid to Government for lobbying in purchases. The effect is decline in market competition. The briber has always upper hand in sales in such places where it is a common practice. In the late 70S’ it was discovered that huge bribes are paid to Government for lobbying in purchases. The effect is decline in market competition. The briber has always upper hand in sales in such places where it is a common practice.

Bribery The briber becomes, in effect, a monopoly seller. To determine whether a payment is ethical, there are three relevant points to consider:

Point one Is the offer of a payment initiated by the payer (the one who pays the money), or does the payee (the one who receives the money) demand the payment by threatening injury to the payer's interests? In the latter case, the payment is not a bribe but a form of extortion. If the threatened injury is large enough, the payer may not be morally responsible for his or her act, or the moral responsibility may at least be diminished. Is the offer of a payment initiated by the payer (the one who pays the money), or does the payee (the one who receives the money) demand the payment by threatening injury to the payer's interests? In the latter case, the payment is not a bribe but a form of extortion. If the threatened injury is large enough, the payer may not be morally responsible for his or her act, or the moral responsibility may at least be diminished.

Point Two Is the payment made to induce the payee to act in a manner that violates his or her official sworn duty to act in the best interests of the public? Or is the payment made to induce the payee to perform what is already his or her official duty? If the payee is being induced to violate his or her official duty, then the payer is cooperating in an immoral act because the payee has entered an agreement to fulfill these duties. Is the payment made to induce the payee to act in a manner that violates his or her official sworn duty to act in the best interests of the public? Or is the payment made to induce the payee to perform what is already his or her official duty? If the payee is being induced to violate his or her official duty, then the payer is cooperating in an immoral act because the payee has entered an agreement to fulfill these duties.

Point Three Are the nature and purpose of the payment considered ethically unobjectionable in the local culture? If a form of payment is a locally accepted public custom and there is a proportionately serious reason for making the payment, then it would appear to be ethically permissible on utilitarian grounds. Are the nature and purpose of the payment considered ethically unobjectionable in the local culture? If a form of payment is a locally accepted public custom and there is a proportionately serious reason for making the payment, then it would appear to be ethically permissible on utilitarian grounds.

Oligopolies and Public Policy What should society do in the face of the high degree of market concentration in oligopolistic industries? There are three main points of view?

Do-Nothing view First, the Do-Nothing view claims that the power of oligopolies is not as large as it appears. Though competition within industries has declined, they maintain that competition between industries with substitutable products has replaced it.

Do-Nothing view In addition, there are "countervailing powers" of other large corporate groups, the government, and unions that keep corporations in check. Finally, they argue that bigger is better, especially in the current age of global competition. Economies of scale, produced by high concentration, actually lower prices for consumers. In addition, there are "countervailing powers" of other large corporate groups, the government, and unions that keep corporations in check. Finally, they argue that bigger is better, especially in the current age of global competition. Economies of scale, produced by high concentration, actually lower prices for consumers.

BIG IS BETTER Chicago School of Thought. Globalization demands big firms to compete internationally. Chicago School of Thought. Globalization demands big firms to compete internationally.

Antitrust view The Antitrust view argues that prices and profits in highly concentrated industries are higher than they should be. By breaking up large corporations into smaller units, they claim, higher levels of competition will emerge in those industries. The result will be a decrease in collusion, greater innovation, and lower prices. The Antitrust view argues that prices and profits in highly concentrated industries are higher than they should be. By breaking up large corporations into smaller units, they claim, higher levels of competition will emerge in those industries. The result will be a decrease in collusion, greater innovation, and lower prices.

Antitrust view Clearly, the antitrust view is based on a number of assumptions. J. Fred Weston has summarized the basic propositions on which this traditional view is based: Clearly, the antitrust view is based on a number of assumptions. J. Fred Weston has summarized the basic propositions on which this traditional view is based:

J. Fred Weston Propositions 1.If an industry is not atomistic with many small competitors, there is likely to be administrative discretion over prices. 2.Concentration results in recognized interdependence among companies, with no price competition in concentrated industries. 1.If an industry is not atomistic with many small competitors, there is likely to be administrative discretion over prices. 2.Concentration results in recognized interdependence among companies, with no price competition in concentrated industries.

J. Fred Weston Propositions 3.Concentration is due mostly to mergers because the most efficient scale of operation is not more than 3 to 5 percent of the industry. A high degree of concentration is unnecessary. 4.There is a positive correlation between concentration and profitability that gives evidence of monopoly power in concentrated industries—the ability to elevate prices and the persistence of high profits. Entry does not take place to eliminate excessive profits. 3.Concentration is due mostly to mergers because the most efficient scale of operation is not more than 3 to 5 percent of the industry. A high degree of concentration is unnecessary. 4.There is a positive correlation between concentration and profitability that gives evidence of monopoly power in concentrated industries—the ability to elevate prices and the persistence of high profits. Entry does not take place to eliminate excessive profits.

J. Fred Weston Propositions 5.Concentration is aggravated by product differentiation and advertising. Advertising is correlated with higher profits. 6.There is oligopolistic coordination by signaling through press releases or other means. 5.Concentration is aggravated by product differentiation and advertising. Advertising is correlated with higher profits. 6.There is oligopolistic coordination by signaling through press releases or other means.

Regulation view The third view is the Regulation view, They argue that subdivision of Big industries is not favourable.They as a giant company may produce other good benefits for the masses. But they also encourage regulated market and even suggest nationalization in case of non- compliance of market regulations. The third view is the Regulation view, They argue that subdivision of Big industries is not favourable.They as a giant company may produce other good benefits for the masses. But they also encourage regulated market and even suggest nationalization in case of non- compliance of market regulations.

But they also suggest the ill effects of nationalization at the same time.

Regulation view which can be seen as a middle ground between the other two. Those who advocate regulation do not wish to lose the economies of scale offered by large corporations, but they also wish to ensure that large firms do not harm the consumers.

Conclusion Whichever view we take, clearly the social benefits of free markets cannot be guaranteed, and the markets themselves cannot be morally justified, unless firms remain competitive.

Ethics & the Environment ‘Greening of business’ has attracted considerable attention in recent times. Available material is essentially ‘campaigning’ in nature. Companies designed to demonstrate that their Environmental record is acceptable, even commendable. Business Ethics must do more than simply tell Business Students & managers to be ‘green’. ‘Greening of business’ has attracted considerable attention in recent times. Available material is essentially ‘campaigning’ in nature. Companies designed to demonstrate that their Environmental record is acceptable, even commendable. Business Ethics must do more than simply tell Business Students & managers to be ‘green’.

Ethics & the Environment Each year 150 million tons of Pollutants are pumped into air we breath. More than 41 million tons of toxic wastes are produced. 15 million gallons of pollutants are dumped in waterways of USA. Each year 150 million tons of Pollutants are pumped into air we breath. More than 41 million tons of toxic wastes are produced. 15 million gallons of pollutants are dumped in waterways of USA.