Author Question: Explain the purpose of antitrust laws. How would the Friedman philosophy of corporate social ... (Read 54 times)

luvbio · **on:** Jul 7, 2018

Explain the purpose of antitrust laws. How would the Friedman philosophy of corporate social responsibility most likely support a decision by a company to expand internationally into a country with weak antitrust laws? Include a description of the

Friedman philosophy in your answer.
What will be an ideal response?

Question 2

The requirement that a sufficient portion of a product's content must originate within a certain market to escape tariff charges is an example of a(n) ________.

A) ad valorem tariff
B) market imperfection
C) tariff-quota
D) subsidy

mirabriestensky · **Reply #1 on:** Jul 7, 2018

Answer to Question 1

Laws designed to prevent companies from fixing prices, sharing markets, and gaining unfair monopoly advantages are called antitrust (antimonopoly) laws. These laws try to provide consumers with a wide variety of products at fair prices. The United States and European Union are the world's strictest antitrust regulators. Companies based in strict antitrust countries often argue that they are at a disadvantage against competitors whose home countries condone market sharing, whereby competitors agree to serve only designated segments of a certain market. That is why firms in strict antitrust countries often lobby for exemptions in certain international transactions. Small businesses also argue that they could better compete against large international companies if they could join forces without fear of violating antitrust laws.
In the absence of a global antitrust enforcement agency, international companies must concern themselves with the antitrust laws of each nation where they do business. The Friedman philosophy of corporate responsibility - named for its main supporter, the late economist Milton Friedman - says that a company's sole responsibility is to maximize profits for its owners (or shareholders) while operating within the law. If a company moved operations from a country having strict antitrust laws to a country having no such laws, managers subscribing to the Friedman philosophy would most likely applaud this decision. They would most likely argue that the company is doing its duty to increase profits for owners and, moreover, is operating within the law in the foreign country. Many people disagree with this argument against socially responsible activities.

Answer to Question 2

B