On adverse effects of consumers' attaching greater importance to firms' ethical conduct (Q1656970)

Summary: Consumers increasingly care about firms' ethical conduct (e.g., labor and environmental practices) when making their consumption choices. This note presents a simple framework to highlight the possibility that this development may induce a \textit{less} desirable production technology choice and bring about \textit{lower} market transparency. When faced with consumers' greater moral concerns, more firms may choose an undesirable mode of production and shroud information about it.