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morality_of_markets_210423.pdf
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The "replacement logic" suggests that if a supplier refuses to engage in an immoral trade, someone else will, but the paper shows that under weak assumptions, the degree of competitive pressure is irrelevant to ethical behavior if prices are flexible. The intuition is that while increased competition makes raising ethical behavior costlier, it also reduces prices and markups, making ethical concerns loom larger. A sufficient condition for these effects to offset each other is that suppliers have consequentialist preferences and returns to scale are constant.

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The "replacement logic" suggests that if a supplier refuses to engage in an immoral trade, someone else will, but the paper shows that under weak assumptions,...

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