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On Adverse Effects of Consumers’ Attaching Greater Importance to Firms’ Ethical Conduct

Author

Listed:
  • Florian Baumann

    (Center for Advanced Studies in Law and Economics (CASTLE), University of Bonn, 53113 Bonn, Germany)

  • Tim Friehe

    (Public Economics Group, University of Marburg, 35037 Marburg, Germany
    Center for Economic Studies (CESifo), 81679 Munich, Germany
    EconomiX-CNRS. Université Paris-Ouest Nanterre La Défense. 200, Avenue de la République, 92001 Nanterre CEDEX, France)

Abstract

Consumers increasingly care about firms’ ethical conduct (e.g., labor and environmental practices) when making their consumption choices. This note presents a simple framework to highlight the possibility that this development may induce a less desirable production technology choice and bring about lower market transparency. When faced with consumers’ greater moral concerns, more firms may choose an undesirable mode of production and shroud information about it.

Suggested Citation

  • Florian Baumann & Tim Friehe, 2017. "On Adverse Effects of Consumers’ Attaching Greater Importance to Firms’ Ethical Conduct," Games, MDPI, vol. 8(3), pages 1-7, September.
    • Handle: RePEc:gam:jgames:v:8:y:2017:i:3:p:39-:d:111882
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    References listed on IDEAS

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    Cited by:

    1. Mark Alfano & Hannes Rusch & Matthias Uhl, 2018. "Ethics, Morality, and Game Theory," Games, MDPI, vol. 9(2), pages 1-4, April.
    2. Christoph Rössler & Tim Friehe, 2020. "Liability, morality, and image concerns in product accidents with third parties," European Journal of Law and Economics, Springer, vol. 50(2), pages 295-312, October.

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