MGT610 Final Term Past Papers

Lecture # 24 Handout

1. Is the offer of a payment initiated by the payer (the one who pays the money), or does the payee (the one who receives the money) demand the payment by threatening injury to the payer's interests? In the latter case, the payment is not a bribe but a form of extortion. If the threatened injury is large enough, the payer may not be morally responsible for his or her act, or the moral responsibility may at least be diminished.
2. Is the payment made to induce the payee to act in a manner that violates his or her official sworn duty to act in the best interests of the public? Or is the payment made to induce the payee to perform what is already his or her official duty? If the payee is being induced to violate his or her official duty, then the payer is cooperating in an immoral act because the payee has entered an agreement to fulfill these duties.
3. Are the nature and purpose of the payment considered ethically unobjectionable in the local culture? If a form of payment is a locally accepted public custom and there is a proportionately serious reason for making the payment, then it would appear to be ethically permissible on utilitarian grounds.

Oligopolies and Public Policy

What should society do in the face of the high degree of market concentration in oligopolistic industries? There are three main points of view:

First, the Do-Nothing view claims that the power of oligopolies is not as large as it appears. Though competition within industries has declined, they maintain that competition between industries with substitutable products has replaced it. In addition, there are "countervailing powers" of other large corporate groups, the government, and unions that keep corporations in check. Finally, they argue that bigger is better, especially in the current age of global competition. Economies of scale, produced by high concentration, actually lower prices for consumers.

Second, the antitrust view argues that prices and profits in highly concentrated industries are higher than they should be. By breaking up large corporations into smaller units, they claim, higher levels of competition will emerge in those industries. The result will be a decrease in collusion, greater innovation, and lower prices. Clearly, the antitrust view is based on a number of assumptions. J. Fred Weston has summarized the basic propositions on which this traditional view is based:

1. If an industry is not atomistic with many small competitors, there is likely to be administrative discretion over prices.
2. Concentration results in recognized interdependence among companies, with no price competition in concentrated industries.
3. Concentration is due mostly to mergers because the most efficient scale of operation is not more than 3 to 5 percent of the industry. A high degree of concentration is unnecessary.
4. There is a positive correlation between concentration and profitability that gives evidence of monopoly power in concentrated industries—the ability to elevate prices and the persistence of high profits. Entry does not take place to eliminate excessive profits.
5. Concentration is aggravated by product differentiation and advertising. Advertising is correlated with higher profits.
6. There is oligopolistic coordination by signaling through press releases or other means.

The third view is the Regulation view, which can be seen as a middle ground between the other two. Those who advocate regulation do not wish to lose the economies of scale offered by large corporations, but they also wish to ensure that large firms do not harm the consumers. Therefore, they suggest setting up regulatory agencies and legislation to control the activities of large corporations. Some even suggest that the government should take over the operation of firms where only public ownership can guarantee that they operate in the public interest.

Whichever view we take, clearly the social benefits of free markets cannot be guaranteed, and the markets themselves cannot be morally justified, unless firms remain competitive.

ETHIC & ENVIRONIMENT

This chapter on ethics and the environment begins with some rather sobering statistics from the World watch Institute. This includes population growth, rising temperature, falling water tables, shrinking cropland per person, collapsing fisheries, shrinking forests, and the loss of plant and animal species. Our environment seems to be stressed nearly to the breaking point. The ethical and technological questions that this state of affairs raises are extremely important and complex.

First, there are still serious disagreements about the extent of the environmental damage that industrial technology has produced. Furthermore, there is no precise way of knowing just how much of a threat this environmental damage will have for our future welfare. And whatever the level of damage, we must surely sacrifice some values to halt or slow it.

To explore these issues, this chapter begins with an overview of the technical aspects of environmental resource use. Then it moves to a discussion of the ethical basis of environmental protection. It concludes with a consideration of our obligation to future generations and the prospects for continued economic expansion.

5.1 The Dimensions of Pollution and Resource Depletion

Environmental damage inevitably threatens the welfare of human beings as well as plants and animals. Threats to the environment come from two sources, pollution and resource depletion. Pollution refers to the undesirable and unintended contamination of the environment by the manufacture or use of commodities. Resource depletion refers to the consumption of finite or scarce resources. In a certain sense, pollution is really a type of resource depletion because contamination of air, water, or land diminishes their beneficial qualities.

Air pollution has been with modern society for nearly 200 years; its costs are increasing greatly. It negatively affects agricultural yields, human health, and global temperatures. The result is a large economic impact and a staggering effect on the quality of human life.

Global warming itself poses a difficult and frightening challenge. Global warming greenhouse gases such as: carbon dioxide, nitrous oxide, methane, and chlorofluorocarbons, are gases that absorb and hold heat from the sun, preventing it from escaping back into space, much like a greenhouse absorbs and holds the sun's heat. Most scenarios concerning the effects of global warming predict massive flooding, increase of disease, loss of plant and animal species, and expansion of deserts at the expense of agricultural land. These effects will have high human and economic costs. However, to halt the increase of greenhouse gasses, we would have to reduce emissions by 60% to 70%, a level that would damage the economies of countries around the world. To halt global warming, experts say that we would need to change our lifestyles and values drastically.

Ozone depletion is also a serious concern. Caused by the release of CFCs into the atmosphere, ozone depletion may lead to several hundred thousand new cases of skin cancer each year and destroy many valuable food crops. Also, ocean plankton, on which the entire ocean's food chain depends, may be severely damaged. Even though CFC production has been nearly halted, we can expect the gasses already released to continue damaging the ozone for the next century.

Burning fossil fuels causes acid rain and global warming. Though not as devastating as global warming, it nevertheless is harming many fish populations and trees, corroding bridges and buildings, and contaminating drinking water. Airborne toxins and air quality in general are also serious concerns for human health.

atmosphere, including phosgene, a nerve gas used in warfare, and methyl isocyanate.