Business Ethics Chapter 12 Glossary
Gross Domestic Product (GDP) is the market value of all final goods and services produced in a country during a year.
The Coase Theorem states that if agents can negotiate the selling of rights to do activities that cause external costs, and do so with perfect information and no transaction costs, then they can always find a market-based solution to problems caused by external costs that maximize total net social benefits.
Socially Optimal Level of Pollution (SOL) is the point at which the financial cost of reducing pollution by one increment outweighs the cost that this increment of pollution will create.
Sustainable development is growth that meets the needs of the present without compromising the ability of future generations to meet their own needs.
A contractarian ethical theory is a theory claiming that ethics consists in an enforced contract among ethical egoists designed to prevent dilemmas of cooperation, such as the Prisoner’s Dilemma situation.
A person, organization, or nonhuman entity has moral standing if we must consider his, her, or its interests in making an ethical standing.
Inter-generational justice is concerned with the distribution of rights and duties between present and future people.
Market fundamentalism is an approach to environmental problems which says that, whatever the environmental effect of an economic market based on existing individual property rights, those effects are ethically permissible.
Conditions where the assumptions of perfect condition do not hold and markets are not efficient are market failures.
Marginal Abatement Cost (MAC) is a measure of the cost of decreasing pollution by one increment.
An internal cost is a cost arising from the economic activity of an agent that is incorporated into the market price of a product.
A tragedy of the commons is a particular type of external cost situation that spreads the external costs of any individual participant’s actions overall all the participants in the situation. This gives each participant a positive net internal benefit and an incentive for doing the action, yet the result of similar actions by all participants is a worse situation.
Environmental economics is an approach to environmental problems that recognizes market failures regarding the environment and studies how we can take collective action to fix environmental problems in a cost-effective manner.
Free-market environmentalism is an approach to environmental problems which says that the bad environmental effects of market behaviours are not ethically permissible, but that the best solution to environmental problems is to privatize the environment.
Marginal Damage (MD) is a measure of the social costs that each additional increment of pollution imposes on everyone.
Ethical egoism is the ethical theory that agents ought always to maximize their own self-interest.
Green virtues are character traits that enable people and corporations to cooperate and flourish in environmentally sustainable societies of people and corporations with similar dispositions.
Cost-Benefit Analysis is a technique of environmental economics that measures the costs and benefits of different environmental policies according to people’s willingness to pay for them. The total net benefits of each policy are calculated and used either as a factual input to a policy decision, or as a way of making a policy decision.
An external cost or negative externality is a cost arising from the economic activity of an agent that is born by others because the market price of the product does not incorporate this cost.
The discount rate is a percentage used by economic utilitarianism to compare present and future benefits and costs.