TIGblogs - Christopher Baan

[By Gary Becker] In the past few decades, economists have analyzed the competition from companies motivated solely by the desire for profits against companies truly motivated in part by other considerations. These considerations include altruism toward consumers, discrimination against minority employees, and a desire to help the environment by using carbon offsets to own carbon emissions. A main message from this analysis is that companies that forego some profits to pursue other goals have trouble competing against profit-maximizing firms. An example is the competition between firms that hire workers solely on the basis of their productivity and cost, and companies that give up profits to avoid hiring African-Americans or other minorities because they are prejudiced against these types of workers. Since firms only interested in profits will hire minority workers when that is profitable, and prejudiced firms will not, discriminating firms will be under a competitive disadvantage.

Tags

Developing Countries, Economic Development