Alternative Regulatory Cases Challenging Consumer Policy

By means of the concept of postmodern politics, we provide insights into how alternative regulation is challenging consumer policy. New actors, new forms of interaction, and new goals are emerging alongside established forms of consumer policy. In particular, we examine two alternative regulatory cases: trust marks and consumer-generated information systems. They both exemplify alternative regulation of electronic commerce, which has facilitated regulatory innovation for over a decade. On the basis of our analysis, we suggest that governmental consumer policy cannot imitate the alternative regulatory solutions. We also encourage governmental actors to consider building bridges to consumer networks. This would broaden the scope of consumer policy and be in line with the modes of operation of governmental actors. Consumers are themselves contributing to this rethinking of governmental consumer policy. By networking, consumers provide each other with empowering information on consumption. Doing so on the massive scale enabled by information and communication technologies, they are challenging conventional consumer policy, which can no longer address consumer needs as it could in the pre-Internet days. New issues are emerging for consumer policy to address, and networked consumers are already contributing to policy.     

Struggles in optimal labelling: how different consumers react to various labels for genetically modified foods

The labelling of genetically modified (GM) foods is an important policy issue, as consumers' attitudes towards these foods appear to be quite sensitive to information about their potential benefits and risks. Because it is difficult for labels to differ across consumers, differences in reactions to label information could lead to conflicts across consumer groups or to different market outcomes. Using factor and cluster analysis, we uncover three consumer segments with different attitudes to the risks and benefits of GM foods. Our segmentation‐based analysis on consumer reactions to information points out important differences across consumers. Not only did we find differences across segments in how they view the credibility of GM‐related information, we also find differences in how information influences segments' perceptions of the product, and in their likelihood to buy.     

Dilution and Negation of Consumer Information by Antifactual Content: Proposals for Solutions

Following identification and analysis of antifactual content and the tendency of information researchers and regulators to ignore it, this article continues the discussion by presenting proposals to incorporate the concept into research and public policy on the quantity and quality of marketplace information available to consumers. Proposals are offered for information researchers, for regulators and policymakers such as the FTC, for advertisers, and for consumers and consumer advocates.     

Evaluation of food labelling usefulness for consumers

Food labelling is a means of communication between food business operators and consumers, representing an important factor in consumer purchasing decisions. The enforcement of the new food labelling policy is aimed to improve food safety and public health through the mandatory indication of information and nutritional values. To understand the usefulness of the information provided for consumers, a survey was carried out to assess the efficacy of the information presented in food labelling. Principal component analysis was performed to obtain a smaller number of uncorrelated factors regarding the usefulness of food labelling. Results showed consumers usually do not read food labels due to lack of time and excessive information. Additionally, food labelling was observed to be more useful for specific consumer groups, such as, athletes, consumers with health conditions or consumers concerned with a healthy lifestyle. The results of the present study highlight the need of information campaigns by public health authorities to show the importance and advantages of reading food labels as well as the development of essential information which should be quickly and clearly seen and understood by consumers.     

A Problem Ignored: Dilution and Negation of Consumer Information by Antifactual Content

Current conceptions of consumer information do not consider types that may dilute or detract from facts available to consumers about products and services. The article discusses the nature and incidence of such antifactual content, identifies research and public policy that ignores the content but could benefit from recognizing it, and describes a role for the content in conceptualizing and better assessing consumer information, in order to provide researchers, regulators, advertisers, and consumers with more accurate evaluations.     

An Information-Based Approach to Labeling Biotechnology Consumer Products

Using an economic framework this paper explores the need for labeling of biotechnological consumer products. In particular, we assess the impact of labeling on information problems faced by consumers and regulators. Using information analysis, we propose an approach to labeling biotechnology products that attempts to respect both the real nature of consumer information-processing capacities and approaches and the environment of uncertainty in which any regulatory policy for biotechnology will operate. We conclude that the fact of uncertainty on the scientific front and the nature of consumer concerns in this area gives rise to a need for some type of labeling. Using labels to convey substantive information, however, is likely to be of limited value to consumers. A comprehensive approach to information policy for consumers in this field should aim instead to use labeling requirements to harness the incentives of producers and other private entities to effectively convey to consumers what they want and need to know. We therefore recommend that governments require a simple alert label on biotechnology consumer goods that will prompt consumers to assess their information needs and producers or others to supply those needs. Government regulation in this scheme would consist of basic health and safety regulation and direct or indirect monitoring and regulation of the content of the information ultimately conveyed to consumers by producers and others.     

Effective Paths for Consumer Empowerment and Protection in Retail Energy Markets

Consumer empowerment and protection are frequently discussed in contemporary energy policy debates. The process of consumer empowerment through information and consumer education has great potential, yet consumer switching as the concomitant outcome of this process remains low. Additional protection for vulnerable consumers is called for. This article is centred on the path to achieving consumer empowerment and protection. In particular, it stresses that empowerment should be viewed as a long-term process. Regulators should not focus on the mere outcome of switching and adopt remedies aimed at changing consumer behaviour in the short term. The discussion highlights how attempts to protect vulnerable consumers through an ancillary application of competition law distort the competitive process and should be avoided. Personal vulnerabilities, such as low income, can be better tackled with targeted social policy measures, whereas instances of vulnerabilities pertaining to the market context, such as difficulties in assessing different energy offers, are better phased out through the market mechanism.     

The Privacy Paradox: Personal Information Disclosure Intentions versus Behaviors

Impelled by the development of technologies that facilitate collection, distribution, storage, and manipulation of personal consumer information, privacy has become a “hot” topic for policy makers. Commercial interests seek to maximize and then leverage the value of consumer information, while, at the same time, consumers voice concerns that their rights and ability to control their personal information in the marketplace are being violated. However, despite the complaints, it appears that consumers freely provide personal data. This research explores what we call the “privacy paradox” or the relationship between individuals’ intentions to disclose personal information and their actual personal information disclosure behaviors.     

Testen der Tester? Grundsätze ordnungsgemäßen Testens!

Tests and comparisons of products can provide useful information on both quality and value of goods and services for consumers, suppliers, and for consumer policy, for example watchdogs. In a market economy like Germany, where consumer markets are not fully transparent and functioning, testing organisations act as information intermediaries. They provide information at the meta-level so that not everyone has to test and compare all goods and services individually. This is why the reliability of testers and testing organisations is of particular importance. This article examines the principles or minimum standards for proper testing and discusses how to control them.     

Consumer Willingness to Pay for Seafood Safety Assurances

Despite its many health benefits, seafood consumption has declined partially due to consumers' safety concerns. Efforts to provide safety assurance to consumers have focused on provision of government inspection programs; programs that both consumer groups and the seafood industry have called inadequate. This study explores consumer preferences for a wide array of alternative safety assurances. Consumers' selection of and willingness to pay for seafood safety assurances were elicited using an in-person market-like experiment. Results indicate that consumers are able to demonstrate clear preferences and values for alternative assurances. This indicates further consumer research is warranted to provide a basis for public policy recommendations regarding seafood safety assurances.     

Effects of shared characteristics between eco-labels: A case for organic and local food

Food labels are created to reduce information asymmetry and help consumers make better food choices. However, the labels may have unanticipated effects, especially when they share common characteristics that may introduce confusion in making food choices. This study investigates how perceived relationships between different food labels may affect the price premiums of organic and local attributes for milk and fresh strawberries. Results show that the impacts of perception vary by product and label, and different food labels could positively affect price premiums on organic and local products. Results provide policy implications for better labeling and educational programs to reduce inadvertent confusion and improve consumer decision-making.     

The Biotechnology Communication Paradox: Experimental Evidence and the Need for a New Strategy

In the past, communication strategies aimed at facilitating consumer acceptance of genetically modified foods have focused on technology-driven, top-down practices. The utility of these practices in influencing the extent to which consumers accept specific GM foods was tested in attitude change experiments involving 1655 consumers from Denmark, Germany, Italy, and the UK. Different information strategies were tested against a control group for their ability to change consumer attitudes. No attitude change occurred. Rather, results indicate that all strategies had a uniform attitude activation effect that significantly decreased consumers' preferences for GM foods as compared to the control group. The discussion focuses on why technology-driven information strategies have failed to convince consumers of the merits of GM foods, and relates these results to recent changes in consumer policy that are aimed at engaging consumers in the debate about innovation processes rather than attempting to align their views with those held by expert communities.     

Consumer needs and requirements for food and ingredient traceability information

The introduction of improved food traceability systems has aimed to restore consumer confidence in food safety and quality, in part by being able to provide consumers with more information about the origins of foods and food ingredients. However, little is known about consumers' opinions and beliefs associated with traceability, nor their preferences for information provision. In the current paper, consumer information needs and requirements regarding traceability are investigated. Semi‐structured interviews with consumers in four European countries focused on the need for traceability, the preferred means of communication, labelling and bodies held responsible for traceability and dealing with fraud. Results show that there is a clear consumer need for varied information about food and the production processes involved. Rigorous and accountable traceability systems may assist in making such information available to consumers.     

Bringing consumer information systems down to earth. Experiences from a Swedish experiment

How is it possible to provide consumers with necessary information to make well informed choices in today's markets where there is a growing supply of complex and ever changing products and services? The information is in the main commercial. Its role is to persuade as well as to inform. Therefore, its usefulness for the consumers is questionable. To bridge this information gap policymakers have initiated programmes to provide useful information for consumers. In this context, Sweden has tried something new, by requiring by law that enterprises supply information in their advertising which is of special significance for the consumers. When this information obligation was put to practice there was unexpected resistance from business, particularly concerning added information in advertising outside the point of sale. An analysis of alternative mandatory consumer information systems (CI) indicates that the resistance and difficulties met in implementing the Swedish information duty system most probably are inherent in all CI-systems requiring business to provide full and detailed information about their products. CI is however only one of the important factors in creating well-informed consumers. The capacity of consumers to absorb and process information and consumer involvement and motivation also affect the outcome.     

Consumer Policy in a Market Economy Considerations from the Perspective of the Economics of Information,the New Institutional Economics as well as Behavioural Economics

The question concerning when a governmental intervention in the market system is justified has occupied economists from the very beginning and has been a controversial discussion topic for just as long. Against this background, with respect to modern consumer policy, which still represents a relatively young field in the theory of economic policy, it is vital to find sound economic reasons for governmental regulations in order to protect consumers. Therefore, the article attempts to assess what the various economic literatures have added to our understanding of good consumer policy. For this reason, those policy implications that might flow from different theoretical approaches in order to broaden the foundation of an economic justification for consumer policy will be analysed. For this purpose, the consumer policy implications of the Economics of Information will be described, including a denomination of some certain problems all of which are not covered satisfactorily by this approach. Subsequently and in order to amend the informational economics framework, further economical approaches from New Institutional Economics, Behavioural Economics as well as Behavioural Consumer Research, which provide a complementary analysis of consumer behaviour in consideration of the respective decision-making situations and determining constraints (formal and informal rules, cognitive and emotional boundaries), will be discussed comparatively with respect to their consumer policy implications.     

Do brands benefit consumers?

Advertising exists to communicate information about, and promote, brands—using ‘brands’ in the broadest sense. Brand owners, it might be believed, are thereby promoting their own interests. This paper explores the extent to which consumers benefit. Brands provide economic value for money, functionality in developing the requisite quality of products to solve consumer problems and psychological satisfaction. Thus functional benefits are intrinsic to the brand and its component products, psychological benefits are in the mind of the consumer and economic benefits relate to the exchange transaction. Brands are diverse, offering different benefits in different ways to different consumers at different times. Any aggregation of brand (dis)benefits therefore needs to be treated with caution. The picture is not wholly positive and consumer concerns with branding need to be factored in. The defence is the marketplace itself: consumers are free to choose. Retailer brands meet the demand, where it exists, for alternatives to manufacturer brands. Some consumers are undoubtedly confused for part of the time but branding is a long-term investment. Manufacturer brand leaders fifty years ago are brand leaders today. They would not exist at all if enough consumers did not continue to buy them.

This article considers these consumer concerns alongside the arguments for brands, except for the last (values) which is outside its scope. In general, the economic case today is secure even though earlier economists considered brands restricted competition. The bottom line of any remaining concern is whether consumers are satisfied that brands provide value for money. If consumers feel satisfied, then they are satisfied whether or not others think they should be. General consumer satisfaction with brands' value for money is none the less an inference drawn from the literature and analysis. Similarly, functional and psychological benefits appear to outweigh disadvantages but empirical research is needed to establish the extent of consumer (dis)satisfactions.     

Digital Content Contracts for Consumers

The application of consumer law to digital content contracts encounters a number of obstacles. Some of these are rather typical for digital content markets, e.g., the legal consequences of the classification of digital content as “goods” or “services” and, more importantly, the absence of general benchmarks to evaluate the conformity of digital content. Other problems, such as the limited usefulness of consumer information and the position of underage consumers, are not as such reserved to digital consumers, but they are amplified in the digital content markets. Moreover, particular attention is paid to the complex relationship between copyright law and consumer law. This paper explores the extent to which consumer (contract) law is fit to address the problems faced by digital consumers wishing to enjoy the benefits of digital content and examines whether the on-going initiatives at national and European level are likely to provide relief. Finally, recommendations for improvement are put forward in cases where the analysis shows that the problems identified are not or are insufficiently solved by these initiatives.     

Information and its impact on consumers׳ reactions to restrictive return policies

Designing an effective return policy is a difficult task for retailers. A very restrictive return policy can keep logistic costs down and prevent fraudulent returns but it can also have a negative effect on consumer behavior. Two experiments explore the role of assortment-related information in moderating consumers׳ negative reactions to more restrictive product return policies. The results demonstrate that consumers will view an assortment characterized by a more restrictive return policy as attractive to the extent that the assortment supports the information processing strategy triggered by the return policy.     

Advertising strategy for outbound travel services

When purchasing a travel service, consumers perform multiple information searches. Depending on the accessed information and the type of media for travel service advertisements, consumers make different evaluations on the travel service. Given this context, we propose a consumer persuasion model that reveals the most effective persuasion process for consumers to make purchasing decisions on travel services. For this study, we conducted a comparative analysis to discern effectiveness and limitations between newspapers and TV infomercials; the two major media for travel service advertisements. Based on the results from the analysis, we drew some meaningful managerial implications for travel service advertising strategy.     

Increasing Price Transparency: Implications of Consumer Price Posting for Consumers' Haggling Behavior and a Seller's Pricing Strategies

In an attempt to gain a better position in haggling, consumers often seek a seller's pricing information (e.g., whether the posted price is negotiable, the discount and transaction prices) before going to that seller. Although traditionally difficult to obtain, such information is becoming increasingly available due to consumer price posting (CPP), whereby consumers post and share their purchase price information on the Internet. In this analytical study, we consider a market in which a seller, who chooses between a fixed price policy and a haggling policy, serves two types of consumers who differ in their willingness to pay and haggling costs. We explore how CPP can affect consumers' behavior and the seller's pricing strategies (i.e., pricing policy and the associated prices). In the absence of CPP, our model features a two-sided uncertainty: the seller does not know individual consumer's type and thus may find it optimal to use a haggling policy to price discriminate consumers, whereas consumers do not readily observe the seller's cost type and pricing policy, and thus are uncertain whether their haggling will be fruitful. In the presence of CPP, consumers' uncertainty about the seller's pricing policy is resolved. Because CPP can improve price transparency, inhibit consumers' acceptance of a posted price and spur price haggling, it seems apparent that it should benefit consumers and hurt the seller. However, our analysis shows that CPP can lead to fewer purchases, higher prices and even a greater seller profit. It further shows that although CPP surely increases information accessibility, it can also reduce the amount of information available to consumers. These results are in sharp contrast to the conventional wisdom in the literature.