Justifying the Fairness of Price Gouging Using Ethical Theories
To begin with, the issue of fairness arises with companies’ attempt to gain an advantageous market position through the exploitation of consumers’ unalterable needs in an unusual market condition (Crane et al., 2019:375). Thus, the justification to exploitative pricing’s fairness is being debated with the following two ethical theories.
Firstly, consequentialism determines morality and ethicality solely based on consequences (Robertson and Walter, 2007). Utilitarianism, as a paradigm, asserts a universalism and maximalism view where ethicality depends on maximizing the greatest good for the greatest number and takes into account the effect poses on all parties affected (Sinnott-Armstrong, 2019). According to Bauer (2021), pandemics disrupt supply chains, leading to relative scarcity in markets with the limited supply and increased demand. As a result, prices are modified to reflect commodities’ increased value. Furthermore, it is stated that supply chain disruptions have increased businesses’ costs, hence, prices are raised to ensure the survival of communities.
On the other hand, price gouging allows fair distribution of resources as it can prevent consumers from over purchasing (ibid). Consequently, everybody can have access to the necessities, benefiting more people than unchanging prices. Therefore, this philosophy suggests that excessive pricing has no indication on firms being ‘exploitative’ and it is a fair, just and ethical behavior. Yet, one may question the implication of fairness and ethicality in terms of distributional issues.
So, hedonism, which is a characteristic of utilitarianism, may be applicable in this situation as excessive pricing leads to emotional issues by imposing pain to the consumers which cannot afford sudden price hikes (Hogg, 2020). Accordingly, an unfair outcome is generated through raising prices which is in adverse to the fairness mentioned previously within utilitarianism since there is a portion of people who are not benefited.
Besides, Rawls’ (1971) ‘Theory of Justice’ can be used with its high criticism on utilitarianism especially through distributive justice. The notion of fairness is emphasized by the approach’s second principle which equality and fair distribution is reflected by enhancing utility of the least well-off. Hence, from a moral standpoint, this theory proposes that price gouging is ‘exploitative’ to vulnerable consumers, i.e., the poor and low-income individuals as the increased price is unaffordable (Buccafusco et al., 2021:7).
Thus, unfairness is resulted from the creation of injustice and inequality since only those who are better-off have access to the resources. Subsequently, a strong sense of unethicality for profiteering is demonstrated with the unfair and unreasonable price inhibited on goods and services.
The share prices of Valeant dropped in just a few weeks from $ 262 to $ 27. This was due to the main reasons – the company’s pricing strategy, the company’s $ 600 million overestimation of its target earnings and the debt problems. Valeant used a pricing strategy where they increased the prices of the drugs of the acquired company to abnormal amounts every time an acquisition occurs. It was noticed that there was a 5500 percent increase in one...
The topic of exploitative pricing has been a long-standing theme irrespective of the world situation. However, due to the recent Covid-19 pandemic, the controversy of excessive pricing on unforeseen circumstances has become a central debate again. According to OECD (2020), attributable to the coronavirus, the business environment has been subjected to instability resulting in the disruption of supply chains. The insufficient production and difficulties in product distribution, simultaneously, with increased demand, has led to shortages in certain products (ibid). As...
The coronavirus pandemic is the first time that all economies across the world have faced such a severe global challenge since the recovery from World War II, and it would be fair to say that the UK have been among the worst affected. In this report, I will investigate how the UK Competitions and Markets Authority (CMA) have adapted to price rises in the economy, how they should ensure a strong recovery in the future, and then conclude whether it...
Have you ever wondered why our business world has made such a limited progress since independence? Have you ever thought why our nation still is in the list of N11 from last 17 years and still could not be a progressively developing nation? It is because of the limits we set in every sphere of our life. It is because of the fact that we have stopped thinking big. It is because we find our satisfaction in making both ends...
1. Introduction The revolution of the industry from agro based to industrial sector is said to be industrialization (Chappelow, 2019). As the immense need of revolution in the planet, the growth of industrialization has begun from 18th-19th century. The urbanization and industrialization goes hand in hand as the growth of industrialization persuaded people to shift from rural place to urban area. Industrialization has improved the quality of human life, progressed in technologies, provided employment opportunities, increased in financial investment, given...
Empirical evidence indicates that greater central bank independence, freedom “from direct political or governmental influence” (Walsh, 2005: 21), is associated with lower inflation (Fischer, 1995). Although difficult to quantify, Fischer estimates that an increase in the inflation rate from 0 to 10% could cost 2-3% of GNP (Fischer, 1981: 23). This essay firstly examines the time-inconsistency literature, specifically the Barro-Gordon Model (BGM) and Rogoff’s ‘Conservative’ Central Banker. Section 3 then analyses ‘Political Business Cycles’. CB should be able to operate...
One of the core principles of the National Health Service (NHS) states that comprehensive services must be available to all irrespective of their sex, religion or financial status. Although this value is widely practiced across the UK, certain disadvantaged groups in the society are not receiving the optimum level of healthcare. In this essay, problems facing unemployed individuals in the UK is discussed. Studies have shown that the mortality rate in all age groups tended to be about two to...
Abstract, This research looks at Fourth industrial revolution and the evolution of industrialization. The fourth industrial revolution has been more disruptive especially with the advances of technology. Humans are now more dependent to technology as a magical formula to make life easier, like access to information, Digital solutions, Physical and biological systems. Modern society has seen three industrial revolution and the fourth industrial revolution will be unpacked and understanding its impact. The current technological trends continue to raise concerns around...
Costco Wholesale can be affected economically through many factors such as, unemployment rate, inflation, consumer debt levels, foreign-currency exchange rates, healthcare costs, reduced consumer confidence, and other economic factors could harmfully affect demand for Costco’s products and services. Prices of certain commodity products, including gasoline and other food products, are historically volatile and are subject to fluctuations arising from changes in domestic and international supply and demand, as well as labor costs (Costco Annual Report, 2018). Figure 1: GDP Value...
01 / 09
Fair Use Policy
EduBirdie considers academic integrity to be the essential part of the learning process and does not support any violation of the academic standards. Should you have any questions regarding our Fair Use Policy or become aware of any violations, please do not hesitate to contact us via firstname.lastname@example.org.
We are here 24/7 to write your paper in as fast as 3 hours.