Kenneth J. Arrow | Social Responsibility and Economic Efficiency
Arrow first reveals the shortcomings in arguments against the social responsibility of firms, or in arguments for profit maximization, setting the stage for why firms should be held responsible to society. In particular, corporations should be held responsible for the harms they cause, such as pollution and traffic congestion, for which they do not pay any costs. Lastly, regulations for such social obligations should be embodied in institutional, legal, or ethical manner, so all firms will accept that their competitors will also be held liable for their fulfillment.
-___________ of the social responsibility of firms, according to Arrow, provides assurance that competing firms will also accept the same responsibility.

Question

Quizplus · Accepted Answer

Institutionalization of social responsibility ensures that all firms are held to the same standards, providing assurance that competitors will also accept these responsibilities.

Kenneth J Arrow | Social Responsibility and Economic Efficiency