Economics of Consumer Protection: Contributions and Challenges in Estimating Consumer Injury and Evaluating Consumer Protection Policy

Journal of Consumer Policy - The author examines the role of economics in consumer protection, drawing from her experience at the U. S. Federal Trade Commission (FTC), which has a dual mandate to...     

Recalls and the Remediation of Hazardous or Defective Consumer Products: The Experiences of the Consumer Product Safety Commission and the National Highway Traffic Safety Administration

There have been many analyses of the nation's safety, health, and environmental programs, but relatively few studies of consumer protection programs. The present study attempts to add to the literature in this area by examining, through early 1982, the recall programs for hazardous or defective consumer products of two federal agencies: the Consumer Product Safety Commission (CPSC) and the National Highway Traffic Safety Administration (NHTSA). The analysis focuses on an evaluation of existing recall methods and their success in repairing hazardous products or in removing them from the marketplace. A review of several indicators of “success” suggests that a large gap exists between the set of all such hazardous products and the subset identified as hazardous and effectively acted upon by the two agencies. Some suggestions for closing this gap are noted and discussed.     

Cost Benefit Analysis of Consumer Product Safety Standards

This paper investigates the role of cost-benefit analysis in evaluating consumer product safety standards and applys such analysis to an evaluation of flammability standards for children's sleepwear. The cost of safety standards includes the costs of standard development and enforcement and the changes in producer and consumer surpluses due to product regulation. The benefits from safety standards are the reduction in product accidents and the direct and indirect costs of such accidents. The cost of the O-6X Children's Sleepwear Standard was based on the change in consumer surplus since it was assumed that supply was perfectly elastic. The benefits were due primarily to the reduction in burn injuries. Cost-benefit ratios ranged from 0.62 to 0.84 assuming that the standard provided 100% protection. The cost-benefit ratios also indicate the degree of protection required by the standard. Thus a ratio of 0.62 implies that 62% protection is required if benefits are to equal costs.     

Product Safety Regulation as a Model for Financial Services Regulation

Because of product safety regulations, exploding toasters and other dangerous products are rare in the American marketplace. Despite the fact that financial products can also be dangerous, with terms as incomprehensible as an electrical wiring diagram, regulation is far less comprehensive. Most financial regulation turns on the identity of the issuer—federal bank, state thrift, and private issuer—rather than on the product itself. Instead of using safety experts, financial products are regulated mainly by agencies whose principal responsibility is to protect the profitability of the financial institutions that issue the products. A Financial Product Safety Commission would provide coherent regulation of financial products, eliminating their most dangerous features.     

The Evolution of Consumer Product Safety Policy and Regulation in India

Consumer product safety in India is undergoing a series of structural reforms, encompassing general consumer protection and specific product safety regulation. This article critically examines the state of consumer product safety as it has developed since the adoption of the original Consumer Protection Act 1986 and Bureau of Indian Standards Act 1986 and on that basis puts forward a first reasoned analysis of the major reforms currently under discussion (the Consumer Protection Bill 2015) or recently passed but not yet implemented (the Bureau of Indian Standards Act 2016). The analysis is framed against the backdrop of a preliminary discussion of the constitutional architecture of India, which is in itself a source of complication in the development of coherent consumer policies. The picture emerging from this article shows that, while progress is being made, the field of consumer product safety in India is a difficult work in progress where policy and regulatory developments are hard to achieve incrementally, and structural reform come at the cost of fundamental choices the feasibility of which might prove difficult.     

Underwriters Laboratories Inc.‘s Experience with Consumer Participation in Television Safety Standard Development

One of the obligations of offerors in the preparation of proposed standards for the Consumer Product Safety Commission is to include consumer representatives on the standards-writing committee. This report describes Underwriters Laboratories Inc.'s problems in identifying consumer representatives and its experience with consumer representation on the committee preparing a proposed television receiver safety standard.     

Consumer Product Redistribution

Abstract

Formats for product redistribution are emerging and evolving, creating alternative channel options for consumers' disposition of unwanted possessions. These retail formats operate in both informal (e.g., garage sales) and formal (online auctions) economies. As consumers participate in redistribution channels, some retailers are confronted with new competition and the potential for declining sales. This article expands on both recycling and disposition literature by examining consumer disposition behavior and the flow of used products through various redistribution channels. Strategies are offered to address consumer disposition behaviors as well as to assist retailers in combating traditional and non-traditional competition.     

Economic Analysis of Current Issues in Consumer Product Safety: Fabric Flammability

Two major issues in the area of consumer product safety are who should protect the consumer and how much protection should be provided. Underlying both these questions are concerns for the consumer's freedom of choice and efficiency. Is the consumer the most efficient risk reducer or should risk reduction be left to the regulatory authorities? Given resources constraints which preclude the attainment of 100 percent protection, what is the optimal degree of protection. This paper applied economic analysis, including cost-benefit analysis, to an examination of both issues. The advantages and disadvantages of the informed buyer approach versus the regulatory approach to the assignment of responsibility for consumer protection are first discussed. Cost-benefit analysis is then applied to an evaluation of actual and hypothetical flammability standards for children's sleepwear and clothing. The two sleepwear standards proved cost effective in contrast to the two clothing standards where the costs of providing additional protection to the cosumer far exceeded the benefits. The results indicate the feasibility and utility of cost-benefit analysis in determining how much protection should be provided.     

Marketing Strategy, Product Safety, and Ethical Factors in Consumer Choice

Firms that wish to be morally responsible in providing products that meet a high standard of safety may face problems competing against firms that make unsafe products and sell these products at cheap prices; these problems may be compounded when consumers do not accurately process information about safety and risk. This paper presents a conceptual argument that the tort system may serve to promulgate information which makes it feasible for firms to market safe products even in the face of these competitive obstacles.To corroborate the conceptual argument, the paper presents the results of an experimental study about the impact of negligence liability information on consumer product safety evaluation. The results show that provision of negligence information heightens consumer concern for safety and firms' ethical behavior, and increases the proportion of consumer choices in favors of the brands sold by manufacturers with a favorable track record for quality. More importantly, they indicate that provision of negligence information reduces the likelihood that brands which conform to inferior safety standards will be chosen by consumers who care about safety standards.     

Understanding Corporate Social Responsibility and Product Perceptions in Consumer Markets: A Cross-cultural Evaluation

The concept of corporate social responsibility is becoming integral to effective corporate brand management. This study adopts a multidimensional and cross-country perspective of the concept and analyses consumer perceptions of behaviour of four leading consumer products manufacturers. Data was collected from consumers in two countries – Spain and the UK. The study analyses consumers’ degree of interest in corporate responsibility and its impact on their perception about the company. The findings here suggest a weak impact of company-specific communication on consumers’ perception. The implications of this study are relevant to companies for strengthening their social responsibility associations with the consumers. Dr. Jaywant Singh is Senior Lecturer at Kingston University, London where he teaches consumer behaviour and international marketing. His research interests include customer loyalty, product variants, new brands, corporate social responsibility, and consumer panel data. He received his PhD in marketing in 2004. Dr. Maria de Mar Garcia de los Salmones is Lecturer at University of Cantabria (Spain). Her current research interests include corporate social responsibility, brand image and consumer behaviour. She received her PhD in business administration in 2002. Dr. Ignacio Rodriguez de Bosque is Professor of Marketing at the University of Cantabria (Spain). His current research interests include Business Communication, relationship marketing and distribution channels. He has published in several international journals such as Tourism, Management, Journal of Retailing and Consumer Services and Industrial Marketing Management.     

Consumer Welfare Implications of Changes in Interstate Telephone Pricing

Past practice in regulating telephone prices has encouraged telephone companies to incur excessive costs. The Federal Communications Commission has recently changed some of these practices. In this paper the consumer welfare implications of some of these changes are examined, primarily the institution of interstate subscriber line charges and changes in the procedures for allocating costs among jurisdictions. The conclusion is that these changes serve consumer interests.     

Regime Market Performance Analysis: Informing European Consumer Policy

The Single Market of the European Union has progressed during recent decades to encompass more than 500 million consumers in 28 EU Member States and adjoining countries. During the same period, consumer issues have received growing policy interest and policy measures have been put in place to harmonize the Single Market, that is, to make national markets more alike. Yet, in order to provide policy measures that promote desirable market outcomes, the considerable challenge of understanding differences in the market performances of participating countries and the relationships between national markets and the Single Market need to be addressed. Consequently, this article proposes the consideration of differences in terms of regimes, that is, between groups of similar countries, when assessing the performances of markets. Differences in market performances are analysed with the Kruskal–Wallis test using survey data from the European Commission, and results were reviewed against market studies carried out by the Commission. Findings show that regime differences in market performance can indeed be observed and that the regime approach can draw policy attention to commonalities in market arrangements in addition to the consumer issues conventionally examined, such as price differences and consumer awareness.     

The FTC's Public Interest Requirement: An Anomoly in Consumer Protection*

Proposals for consumer class actions and individual law suits have been considered by Congress during its last two sessions. Both bills sponsored by the administration condition recovery by the consumer upon successful completion of action by the FTC. FTC action, under these proposals, would be an absolute prerequisite to private recovery. Since private recovery is made to depend upon FTC action, the jurisdiction of the Federal Trade Commission becomes critical in determining whether or not a consumer will be entitled to relief. The “Public Interest Requirement” has long been viewed by the courts as a limitation upon Commission Jurisdiction. Thus, if the administration proposals are adopted, that requirement will have to be satisfied before individual consumer recovery will be available. This article seeks to identify the elements of the public interest requirement. Both judicial opinions and the Commission's criteria are considered and evaluated.     

The Place of Consumer Contract Law Within the Process on European Contract Law

This paper shows the development of European consumer contract law within the whole area of European contract law. It explains in some detail the possible contents of one of the major options for the future – the development of a specific consumer contract law in form of a framework Directive. Such an instrument would combine the common denominators of the consumer contract Directives: the applicable definitions of a consumer and a trader, the right of withdrawal, the pre-contractual information obligations, the burden of proof, the private international law clause, and the nature of consumer law as mandatory law. Furthermore the paper shows how the Commission Communication of July 2001 and the Commission Action Plan of 2003 shape the process of European contract law. Finally, it analyses in particular the treatment of consumer contract law in the Action Plan.     

探究产品颜色、消费者性格和消费行为之间关系

通过梳理颜色和性格相关性理论研究以及性格和消费行为理论研究,发现到目前为止,对颜色、性格和消费者消费行为三者之间关系的实证研究比较少。基于此,论文选取某大学学生为研究对象,发放问卷500份,回收有效问卷338份,构建颜色-性格-消费行为理论模型。借助SPSS软件对数据进行相关分析。结果发现,不同颜色反应不同消费者性格,不同性格反映出不同消费行为,针对不同颜色反映出不同性格所表现出的不同消费行为提出有效的营销策略,希望此研究能为企业营销决策提供有力依据。     

EU Food Safety Regulation in the Aftermath of the BSE Crisis

Until the outbreak of the BSE crisis, many of the Community's rules relating to food safety regulation were mainly created on an ad hoc basis and/or developed in the jurisprudence of the European Court of Justice. The BSE crisis, however, clearly demonstrated that where important political interests are at stake, this ad hoc approach is not sufficient to guarantee an effective and legitimate food safety policy and decision-making free from manipulation and capture. Therefore, the Commission has drastically revised its food safety policy. This article discusses the main elements of the new policy followed by the Commission. It analyses the new principles developed by both the Commission and the European Court of Justice. In conclusion it discusses the remaining challenges and gives some suggestions to further develop the emerging concept of Community food safety regulation.     

EU Consumer Law Outside the European Union: The Case of Albania

The article examines the emergence of Albanian Consumer Law as an example of the application of the EU consumer acquis beyond the European Union. The argument is that Albanian Consumer Law was established and developed principally as a result of external pressures, whereby as part of the pre-accession process Albania has undertaken an obligation to harmonize its consumer law with EU law. In turn, the weakness of domestic pressures and factors, including a genuine commitment on the part of Albanian policy makers to develop consumer law so as to protect their citizens as consumers, resulted in a fairly slow evolution of consumer law in Albania and the lack of implementation of the initial enactments in practice. However, the empowering of a dedicated Consumer Protection Commission as the main institution in charge of enforcement of consumer law in Albania has led to some enforcement activity and a significant number of consumer protection cases. An analysis of the cases suggests the Commission is using, and upgrading, its powers so as to intervene in a number of different sectors in the economy, including against quite powerful market players.     

Consumer Awareness of the Legal Obligations of Funeral Providers

The results from a consumer survey that examined consumer knowledge of some parameters of the Funeral Rule are presented. Currently, all funeral home activities are regulated under the Funeral Industry Practices Rule of the Federal Trade Commission. The rule is premised on the assumption that it is difficult for consumers to make careful, informed purchase decisions in at‐need situations because of emotional stress, time pressure, and lack of familiarity with available goods and services. However, limited research has assessed how much consumers know about the legal obligations of funeral providers as provided for by the Funeral Rule. Implications for consumer protection and policy are discussed.     

A Proposed Paradigm for Consumer Product Disposition Processes

The study of consumer behavior has dealt largely with acquisition and consumption. Very little attention has been given to a third stage-disposition. This paper presents a paradigm of consumer product disposition processes. The paradigm shows the person, product and situation as components influencing the disposition process.