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Business Ethics Journal Review:
Volume >
7 >
Issue: 4
Joseph Heath
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Moriarty argues that the Market Failures Approach (MFA) to business ethics is inapplicable to “real world” problems, because it treats “market failure” as a failure to achieve Pareto efficiency. Depending upon how it is applied, Pareto efficiency is either trivially easy to satisfy or else so demanding that no real-world market could ever satisfy it. In this Commentary, I argue that Moriarty overstates these difficulties. The regulatory structure governing markets is best understood as an attempt to maximize the number of Pareto-improving exchanges that occur. There is no reason to think business self-regulation cannot be guided by the same normative-conceptual framework.
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