Do market forces erode moral actions? Re-visiting Dewatripont and Tirole (2024)

Jean-Marie Baland () and Giorgio Ferroni ()
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Jean-Marie Baland: Development Finance and Public Policies, University of Namur
Giorgio Ferroni: Development Finance and Public Policies, University of Namur

No 2603, DeFiPP Working Papers from University of Namur, Development Finance and Public Policies

Abstract: Dewatripont and Tirole (2024) show that firms’ moral conduct in the market is independent of competitive pressure. We argue that such a result critically hinges on the assumption of perfect information about the firms’ moral actions —an assumption that is, in general, unlikely to hold. Specifically, the number of firms and their size matter if consumers have only a general perception of morality in the market. In such a setting, morality becomes a public good: firms bear the full cost of their moral behaviour while capturing only a fraction of the benefits from increased consumer willingness to pay.

Pages: 9 pages
Date: 2026-02
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Persistent link: https://EconPapers.repec.org/RePEc:nam:defipp:2603

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