Question

Once the Consumer Product Safety Commission (CPSC) prohibits the sale of a particular product in the United States, a manufacturer can no longer sell the product to U.S. wholesalers or retailers. However, the product can be sold in other countries that have not prohibited its sale. The same is true of other countries' sales to the United States. For example, Great Britain outlawed the sale of the prescription sleeping pill, Halcion, but sales of the drug continue in the U.S. The British medical community reached conclusions regarding the pill's safety that differed from the conclusions reached by the medical community and the Food and Drug Administration in the U.S. Some researchers who conducted studies on the drug in the U.S. simply concluded that stronger warning labels were needed.

The CPSC outlawed the sale of three-wheeled all-terrain cycles in the U.S. in 1988. While some manufacturers had already turned to four-wheel models, other manufacturers still had inventories of three-wheel cycles. Testimony on the cycles ranged from contentions that the vehicles themselves were inherently dangerous, to arguments that the vehicles

were safe but drivers were too young, too inexperienced, and more inclined to take risks. Still, the three-wheeled vehicle can be sold outside the U.S. For many companies, chaos follows a product recall because inventory of the recalled product may be high. Often, firms must decide whether to "dump" the product in other countries or take a write-off that could

damage earnings, stock prices, and employment stability. If you were a manufacturer holding substantial inventory of a product that has been outlawed in the U.S., what ethical concerns would you have about selling the product in countries that do not [yet] prohibit its sale? Please discuss those concerns and the arguments for and against taking action based on those concerns. To what extent will your decision be affected by the level of the write-down in income you must take?

Answer 1