Consider the Following Facts:

Two companies are in competition to manufacture widgets in the Texas market. They are both approximately the same size and manufacture the widgets in plants located near each other within Texas. Each companys plant generates pollution in an amount arguably in violation of federal laws and several complaints have been made to the Environmental Protection Agency (EPA) by local residents.

Both companies are currently making, in round numbers, 50 million dollars a year in net profits. The costs associated with fighting the EPAs investigation and the resulting damage to each companys brand name and profits is expected to be 25 million dollars annually if the situation does not change.

However, if some additional filtering equipment is bought and installed at either of the plants then there will be an increase in yearly costs of 15 million dollars, but then the EPA will likely drop the matter and no further impact to a companys bottom line is expected.

Only one of the plants is required to install the equipment for the EPA to drop the matter.

If only one company installs the equipment then it is likely that the other company will actually increase its market share and sales as the complaints against it will go away too. This would result in an additional 10 million dollars in annual net profits at the expense of the other company.

Neither company knows what the other will do. Nor are they allowed to communicate with the other given the anti-trust statutes enacted in the United States.

If neither installs the equipment then things stay the same.

It might help to look at the situation graphically:

	Firm B Installs		Firm B Doesn't Install
	Firm A's Profits	Firm B's Profits	Firm A's Profits	Firm B's Profits
Firm A Installs	35	35	25	60
Firm A Doesn't Install	60	25	25	25

You are the owner of Firm A. Do you:

A Install the equipment

B Do not install the equipment

Questions:

#1 - What choice do you make? ______________

#2 - How would your answer be different, if at all, if you utilized the Utilitarianism school of ethics?