Journal of Business Ethics 28 (4):215 - 228 (2000)

This paper addresses the conflicting environmental interests of a firm and the community, an important stakeholder. The short-term profit maximization objective of a firm may stand in contrast with what the community wants – a "safe and clean environment". This paper argues that the information regarding the environmental impact of a firm's products, processes, and waste may be asymmetrically distributed between the firm and the community. The resultant information asymmetry may influence the probability of a firm acting opportunistically, and ultimately, a firm's ethical behavior. The paper identifies information asymmetry between a firm and community, as well as that within the community. The perceived information asymmetry across various community segments may perhaps be a determinant of environmental discrimination. The paper further contends that information asymmetry may diminish in the long run. Finally it examines the implications of information asymmetry for firms and government policy.
Keywords Philosophy   Ethics   Business Education   Economic Growth   Management
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The Chain Store Paradox.Reinhard Selten - 1978 - Theory and Decision 9 (2):127-159.

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