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http://ssrn.com/abstract=1560024
 
 

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The Ethics of 'Commercial Bribery': Integrative Social Contract Theory Meets Transaction Cost Economics


D. Bruce Johnsen


George Mason University - School of Law; PERC - Property and Environment Research Center

February 26, 2010

Journal of Business Ethics, Vol. 88, No. 4, October 2009
George Mason Law & Economics Research Paper No. 10-13

Abstract:     
This paper provides a modified Integrative Social Contract Theory (ISCT) analysis of commercial bribery based on transaction cost economics. In the language of Antitrust, commercial bribery is a form of vertical arrangement subject to the same efficiency analysis that has found other vertical arrangements potentially beneficial to consumers. My analysis shows that actions condemned as commercial bribery in the Honda case (1996) may well have benefited Honda’s dealer network once promotional free riding and other forms of rent seeking by dealers are considered. I propose that the term 'commercial bribery' should be avoided until after an ISCT analysis shows that the community is likely to have been harmed. The term 'third-party payments' is a more ethically neutral term with which to begin the analysis.

Number of Pages in PDF File: 14

Keywords: aggregate welfare, business ethics, community norms, dealer promotion, Donaldson, fairness, federalism, Hardin, informational role of prices, justice, Ronald Coase, social efficiency, stakeholders, Tom Dunfee

JEL Classification: A13, J41, K12, L14


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Date posted: March 1, 2010 ; Last revised: February 25, 2015

Suggested Citation

Johnsen, D. Bruce, The Ethics of 'Commercial Bribery': Integrative Social Contract Theory Meets Transaction Cost Economics (February 26, 2010). Journal of Business Ethics, Vol. 88, No. 4, October 2009; George Mason Law & Economics Research Paper No. 10-13. Available at SSRN: http://ssrn.com/abstract=1560024

Contact Information

D. Bruce Johnsen (Contact Author)
George Mason University - School of Law ( email )
3301 Fairfax Drive
Arlington, VA 22201
United States
703-993-8066 (Phone)
703-993-8088 (Fax)
PERC - Property and Environment Research Center
2048 Analysis Drive
Suite A
Bozeman, MT 59718
United States

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