Profiteering is a
pejorative
A pejorative or slur is a word or grammatical form expressing a negative or a disrespectful connotation, a low opinion, or a lack of respect toward someone or something. It is also used to express criticism, hostility, or disregard. Sometimes, a ...
term for the act of making a
profit
Profit may refer to:
Business and law
* Profit (accounting), the difference between the purchase price and the costs of bringing to market
* Profit (economics), normal profit and economic profit
* Profit (real property), a nonpossessory inter ...
by methods considered
unethical
Ethics or moral philosophy is a branch of philosophy that "involves systematizing, defending, and recommending concepts of right and wrong behavior".''Internet Encyclopedia of Philosophy'' The field of ethics, along with aesthetics, concerns ma ...
.
Overview
Business
Business is the practice of making one's living or making money by producing or buying and selling products (such as goods and services). It is also "any activity or enterprise entered into for profit."
Having a business name does not separ ...
owners may be accused of profiteering when they
raise prices during an emergency (
especially a war). The term is also applied to businesses that play on
political corruption
Political corruption is the use of powers by government officials or their network contacts for illegitimate private gain.
Forms of corruption vary, but can include bribery, lobbying, extortion, cronyism, nepotism, parochialism, patronage, i ...
to obtain government contracts.
Some types of profiteering are illegal, such as
price fixing
Price fixing is an anticompetitive agreement between participants on the same side in a market to buy or sell a product, service, or commodity only at a fixed price, or maintain the market conditions such that the price is maintained at a given ...
syndicates, for example on
fuel subsidies
Energy subsidies are measures that keep prices for customers below market levels, or for suppliers above market levels, or reduce costs for customers and suppliers. Energy subsidies may be direct cash transfers to suppliers, customers, or rel ...
(see ''
British Airways price-fixing allegations''), and other
anti-competitive
Anti-competitive practices are business or government practices that prevent or reduce competition in a market. Antitrust laws differ among state and federal laws to ensure businesses do not engage in competitive practices that harm other, usuall ...
behaviour. Some are restricted by industry codes of conduct, e.g. aggressive
marketing
Marketing is the process of exploring, creating, and delivering value to meet the needs of a target market in terms of goods and services; potentially including selection of a target audience; selection of certain attributes or themes to emph ...
of products in the
Third World
The term "Third World" arose during the Cold War to define countries that remained non-aligned with either NATO or the Warsaw Pact. The United States, Canada, Japan, South Korea, Western European nations and their allies represented the " First ...
such as
baby milk
Infant formula, baby formula, or simply formula (American English); or baby milk, infant milk or first milk (British English), is a manufactured food designed and marketed for feeding to babies and infants under 12 months of age, usually prepar ...
(see ''
Nestlé boycott
Nestlé S.A. (; ; ) is a Swiss multinational food and drink processing conglomerate corporation headquartered in Vevey, Vaud, Switzerland. It is the largest publicly held food company in the world, measured by revenue and other metrics, since ...
'').
Types of profiteering
*
Price fixing
Price fixing is an anticompetitive agreement between participants on the same side in a market to buy or sell a product, service, or commodity only at a fixed price, or maintain the market conditions such that the price is maintained at a given ...
*
Price gouging
Price gouging is a pejorative term used to describe the situation when a seller increases the prices of goods, services, or commodities to a level much higher than is considered reasonable or fair. Usually, this event occurs after a demand or ...
*
War profiteering
A war profiteer is any person or organization that derives profit from warfare or by selling weapons and other goods to parties at war. The term typically carries strong negative connotations. General profiteering, making a profit criticized a ...
Laws
Profiteering is illegal in several countries, including but not limited to:
*UK: Chapter 1 of the
Competition Act 1998
The Competition Act 1998 is the current major source of competition law in the United Kingdom, along with the Enterprise Act 2002. The act provides an updated framework for identifying and dealing with restrictive business practices and abuse o ...
*Germany
§ 291 StGB(Criminal Code) – up to 10 years' jail maximum penalty
*Austria
§ 154 StGB– up to 5 years' jail maximum penalty
See also
*
Hoarding (economics)
Hoarding in economics refers to the concept of purchasing and storing a large amount of product belonging to a particular market, creating scarcity of that product, and ultimately driving the price of that product up. Commonly hoarded products inc ...
*
Business ethics
Business ethics (also known as Corporate Ethics) is a form of applied ethics or professional ethics, that examines ethical principles and moral or ethical problems that can arise in a business environment. It applies to all aspects of business c ...
*
Price gouging
Price gouging is a pejorative term used to describe the situation when a seller increases the prices of goods, services, or commodities to a level much higher than is considered reasonable or fair. Usually, this event occurs after a demand or ...
*
Product sabotage
*
Rent seeking
Rent-seeking is the act of growing one's existing wealth without creating new wealth by manipulating the social or political environment.
Rent-seeking activities have negative effects on the rest of society. They result in reduced economic effi ...
*
Supracompetitive pricing
*
Ticket scalping
Ticket resale (also known as ticket scalping or ticket touting) is the act of reselling tickets for admission to events. Tickets are bought from licensed sellers and then sold for a price determined by the individual or company in possession of ...
*
Usury
Usury () is the practice of making unethical or immoral monetary loans that unfairly enrich the lender. The term may be used in a moral sense—condemning taking advantage of others' misfortunes—or in a legal sense, where an interest rate is c ...
Example cases
*
British Airways price-fixing allegations
References
Business terms
Profit
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