What is a good reason that free markets will often lead to ethically good transactions?

by: admin Saturday, March 7th, 2009

What is a good reason that free Markets will often lead to ethically good transactions? What is a reason that this wont always be the case. Is there ways to prevent this reason without restricting anything?

Sounds like a homework question to me. Look up free market in your book.

The drive for a free market is competition. Businesses compete to offer the best deal. So if business A and business B sell the exact same product for the same price, but business A employed children in factories to produce the product, then people will buy from business B, since they are more ethical and their ethically-superior-to-business-A reputaton spreads. Usually though, business A will offer the same product for less, because if they're employing children to work in their factories, then it doesn't cost them as much to produce the product since children work for less wages, so they can sell it for less. This drives customers to business A instead of business B, because most often people will pay the lesser price for the same product and not ask where the product came from. There are two ways to prevent business A from employing children: the first is a law that says products sold in the region under the law cannot have been produced by factories who employ children (a restriction or regulation), the second is that business B will have to find a way to lower the price of the product and then still promote their ethical practice until they eventually gain the market share over business A.

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One Response to “What is a good reason that free markets will often lead to ethically good transactions?”

downloader Said:

Sounds like a homework question to me. Look up free market in your book.

The drive for a free market is competition. Businesses compete to offer the best deal. So if business A and business B sell the exact same product for the same price, but business A employed children in factories to produce the product, then people will buy from business B, since they are more ethical and their ethically-superior-to-business-A reputaton spreads. Usually though, business A will offer the same product for less, because if they're employing children to work in their factories, then it doesn't cost them as much to produce the product since children work for less wages, so they can sell it for less. This drives customers to business A instead of business B, because most often people will pay the lesser price for the same product and not ask where the product came from. There are two ways to prevent business A from employing children: the first is a law that says products sold in the region under the law cannot have been produced by factories who employ children (a restriction or regulation), the second is that business B will have to find a way to lower the price of the product and then still promote their ethical practice until they eventually gain the market share over business A.
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Comment made on March 7th, 2009 at 11:59 pm
 

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