Business Ethics and Corporate Governance, Second Edition

REGULATION OF COMPETITION

While it is important and necessary to promote competition among firms to enable consumers gain maximum advantage from a free market economy, an unregulated competition is bad and may even lead to unmitigated disaster and destruction of the nation’s wealth. Competition particularly between firms of highly unequal strength can be self-destructive. In unregulated markets there can be widespread negative spillover effects. The negative effects could be in the form of information asymmetries, unethical collusions, hostile takeovers, malicious interlocking directorates in companies, transfer pricing, strategic market alliances, unjustified market segmentation and differential pricing and a number of other monopolistic and ...