Final answer:
Discrimination persists in competitive markets due to managerial, worker, and customer biases, along with societal norms that can impact a firm's profits, with market forces often inadequate to counteract these influences.
Step-by-step explanation:
Discrimination can persist in competitive markets due to several interconnected factors. Economist Gary Becker and others, like William A. Darity Jr., have explained that discriminatory impulses can occur at multiple levels within a market, including among managers, workers, and customers. When societal norms harbour strong discriminatory attitudes, managers who are not personally prejudiced may still engage in discriminatory practices if they believe fair treatment of minority groups or women could hurt their firm's profits by negatively affecting the morale of prejudiced co-workers or by driving away prejudiced customers.
Furthermore, both a 'taste' for discrimination and statistical discrimination could lead to biased outcomes. While competitive forces could, in theory, reduce the incentive to discriminate, strong social attitudes and the potential for reduced profits due to discrimination among customers or workers override these market forces. In summary, businesses that do not adhere to societal norms may suffer economically, and market forces alone are often inadequate to counteract these norms, leading to the persistence of discriminatory practices.