Does Competition Destroy Ethical Behavior?
AbstractExplanations of unethical behavior often neglect the role of competition, as opposed to greed, in assuring its spread. Using the examples of child labor, corruption, excessive' executive pay, corporate earnings manipulation, and commercial activities by universities, this paper clarifies the role of competition in promoting censured conduct. When unethical behavior cuts costs, competition drives down prices and entrepreneurs' incomes, and thereby reduces their willingness to pay for ethical conduct. Nonetheless, I suggest that competition might be good for ethical behavior in the long run, because it promotes growth and raises incomes. Higher incomes raise the willingness to pay for ethical behavior, but may also change what people believe to be ethical for the better.
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Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 10269.
Date of creation: Feb 2004
Date of revision:
Publication status: published as Shleifer, Andrei. "Does Competition Destroy Ethical Behavior?," American Economic Review, 2004, v94(2,May), 414-418.
Note: CF IO LS LE
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Other versions of this item:
- D41 - Microeconomics - - Market Structure and Pricing - - - Perfect Competition
- L31 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Nonprofit Institutions; NGOs
This paper has been announced in the following NEP Reports:
- NEP-ALL-2004-02-01 (All new papers)
- NEP-COM-2004-02-01 (Industrial Competition)
- NEP-HPE-2004-02-01 (History & Philosophy of Economics)
- NEP-LAM-2004-02-01 (Central & South America)
- NEP-MIC-2004-02-01 (Microeconomics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Lucian Arye Bebchuk & Jesse M. Fried, 2003.
"Executive Compensation as an Agency Problem,"
NBER Working Papers
9813, National Bureau of Economic Research, Inc.
- Marianne Bertrand & Sendhil Mullainathan, 2001. "Are Ceos Rewarded For Luck? The Ones Without Principals Are," The Quarterly Journal of Economics, MIT Press, vol. 116(3), pages 901-932, August.
- Bergstresser, Daniel & Philippon, Thomas, 2006.
"CEO incentives and earnings management,"
Journal of Financial Economics,
Elsevier, vol. 80(3), pages 511-529, June.
- Bebchuk, Lucian A. & Fried, Jesse M., 2003. "Executive Compensation as an Agency Problem," Berkeley Olin Program in Law & Economics, Working Paper Series qt81q3136r, Berkeley Olin Program in Law & Economics.
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