Profit and the Public Good

These flashcards cover key concepts related to the relationship between profit and the public good, including definitions and implications of various economic and environmental phenomena.

Externalities

Costs or benefits of an individual’s or firm’s actions that affect others but are not reflected in market prices.

Positive externalities

Benefits for society that are often underprovided, such as education or vaccination.

Negative externalities

Costs imposed on society that are often overproduced, such as pollution.

Tragedy of the commons

A situation where individuals acting in self-interest overuse shared resources, causing long-term collective harm.

Government intervention

Actions taken by the government, such as regulation, taxation, or subsidies, to correct market failures.

Natural capital

The stock of natural ecosystems that yield a flow of valuable goods and services into the future.

Carrying capacity

The maximum number of people that can be supported in a given area with natural resource limitations.

Ecological footprint

A measure of human environmental impact, quantifying the area of land, air, and water ecosystems required to produce the resources consumed.

Sustainability

Meeting the needs of the present without compromising the ability of future generations to meet their own needs.

Materiality

The priority of sustainability issues based on their significance to stakeholders and the company's operations.

Shareholder capitalism

A model where a company's primary obligation is to maximize profits for shareholders.

Stakeholder capitalism

A model where a company considers the interests of all stakeholders, including employees, customers, suppliers, and the community.

Denial strategy

A response by firms to ignore or deny responsibility for social and environmental issues.

Defense strategy

A response where firms acknowledge problems but make minimal changes to address them.

Isolated strategy

Sustainability initiatives that exist in specific parts of the company and are not part of the core strategy.

Transformational strategy

A comprehensive approach to sustainability where it is integrated into the core of the company’s business model.

Corporate social responsibility (CSR)

The self-regulation of a business to be socially accountable to itself, its stakeholders, and the public.

Ecological overshoot

The situation when humans use more natural resources than the Earth can regenerate in the same time period.

ESG

Environmental, social, and governance criteria that investors use to evaluate potential investments.

Greenwashing

Deceptive practices by companies to appear environmentally friendly without making significant changes.

Corporate citizenship

The responsibilities of a corporation towards society, including social and ethical obligations.

Triple bottom line

A sustainability framework that considers social, environmental, and economic impacts.

Subsidies

Financial assistance granted by the government to encourage certain behaviors or actions.

Regulatory capture

A situation where regulatory agencies become dominated by the industries they are charged with regulating.

Cash flow

The total amount of money being transferred into and out of a business.

Divestment

The action of selling off subsidiary business interests or investments.

Public goods

Goods that are non-excludable and non-rivalrous, such as clean air.

Common pool resources

Resources that are non-excludable but rivalrous, leading to potential overuse.