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The Morality of Markets

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  • Mathias Dewatripont
  • Jean Tirole

Abstract

Scholars and civil society have argued that competition erodes supplier morality by offering consumer choice: "If I don't do it, someone else will". This paper establishes a robust irrelevance result, whereby intense market competition does not crowd out consequentialist ethics; it thereby issues a strong warning against the wholesale moral condemnation of markets and procompetitive institutions. Intense competition, while not altering the behavior of protable suppliers, however may reduce the standards of highly ethical suppliers or non-profits, raising the potential need to protect the latter in the marketplace.

Suggested Citation

  • Mathias Dewatripont & Jean Tirole, 2022. "The Morality of Markets," Working Papers ECARES 2022-35, ULB -- Universite Libre de Bruxelles.
  • Handle: RePEc:eca:wpaper:2013/351283
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      • Martin Dufwenberg & Olof Johansson Stenman & Michael Kirchler & Florian Lindner & Rene Schwaiger, 2021. "Mean Markets or Kind Commerce?," Working Papers 2021-07, Faculty of Economics and Statistics, Universität Innsbruck.
    2. Byambadalai, Undral & Ma, Ching-to Albert & Wiesen, Daniel, 2023. "Changing preferences: An experiment and estimation of market-incentive effects on altruism," Journal of Health Economics, Elsevier, vol. 92(C).

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    Keywords

    Competition; consequentialism; replacement effect; non-profits; corporate social responsability; strategic complementarities; race to the ethical bottom.;
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