Business Ethics – Discussion Project – Market failures?

Return again to your case.  This time:

1.  See if you can identify any of the features we have discussed that might undermine or reduce the effectiveness of market competition as an incentive for people to do what is ethically right.  (Note: Consider both intrafirm and extrafirm factors.)

Informational asymmetries?
Monopoly power?
Public goods?
‘External’ costs or benefits?
Moral hazards?
Artificial or distorted wants?
Inequitable distribution of resources?
Grossly unequal bargaining power?

2. How serious do you think these problems are in your case?  Would they have the effect of allowing the firm or its managers to ‘get away with’ abusing or exploiting others without paying a cost in terms of the ‘bottom line’?  If there is a potential negative impact on the ‘bottom line’, how likely is it that this will be large enough and materialize quickly enough to adequately motivate managers who see their only duty as the maximization of profits (or of their personal wealth)?