NCJ Number
63317
Journal
University of Pennsylvania Law Review Volume: 128 Issue: 1 Dated: (NOVEMBER 1979) Pages: 1-40
Date Published
1979
Length
40 pages
Annotation
A NONPATERNALISTIC RATIONALE FOR CONSUMER PROTECTION INTERVENTION IS PROPOSED; CIRCUMSTANCES UNDER WHICH THE GOVERNMENT SHOULD INTERVENE AND SUGGESTED INTERVENTION METHODS ARE EMPHASIZED.
Abstract
THE CURRENT CRISIS IN CONSUMER PROTECTION POINTS UP THE NEED FOR REEXAMINATION OF FUNDAMENTAL ISSUES SUCH AS WHY CONSUMERS NEED PROTECTION AND HOW THIS PROTECTION CAN BEST BE EFFECTED. THE NEED FOR CONSUMER PROTECTION LIES NOT IN THE EXISTENCE OF 'BAD' PRODUCTS BUT IN MARKET RELATIONSHIPS WHICH MAKE IT UNLIKELY THAT SELLERS WILL TAKE SUFFICIENT STEPS TO PREVENT CONSUMER MISTAKES. DURING THE 1970'S, THE GOVERNMENT INCREASINGLY ASSUMED THE ROLE OF PURCHASING AGENT, ASSESSING THE MERITS AND DEMERITS OF PARTICULAR PRODUCTS ON BEHALF OF CONSUMERS. AS A RESULT, THE SCOPE OF GOVERNMENT INTERFERENCE ACQUIRED LIMITLESS POTENTIAL. AS THE FOCUS OF PROTECTION SHIFTED FROM MARKETS TO PRODUCTS, ITS RATIONALE LOST ANY LOGICAL CONNECTION WITH THE EXISTENCE OR NONEXISTENCE OF COMPETITION. A SURVEY OF FOUR POTENTIALLY PROCONSUMER MARKET RESTRICTIONS INCLUDING MARKET DIVISION AGREEMENTS, OCCUPATIONAL LICENSING, TYING ARRANGEMENTS, AND TRADEMARK PROTECTION SHOWS THAT EXISTING LAW AND POLICY LACK THE BASIC ANALYTICAL TOOLS NEEDED TO UNDERSTAND THE INTERPLAY BETWEEN COMPETITION AND CONSUMER PROTECTION. A GENERAL APPROACH TO INTERVENTION THAT AVOIDS TAKING DIRECT CONTROL OVER PRODUCT QUALITY OR SELLER CONDUCT IS SUGGESTED CONSIDERING COST-BENEFIT FACTORS. INTERVENTION IS INDICATED FOR OVERCOMING INFORMATION IMPEDIMENTS AND FOR OVERCOMING MARKET CONCENTRATION AND COLLUSION. IF PRODUCTS ENTAIL SUBSTANTIAL HIDDEN COSTS, ATTRIBUTION AND REPUTATION PROBLEMS MAKE IT UNLIKELY THAT CONSUMERS CAN RELY UPON SELLER GOODWILL, AND THE MARKET IS NOT PARTICULARLY CONCENTRATED, THE CREATION AND ENFORCEMENT OF PROPERTY RIGHTS IN TRUSTWORTHINESS WOULD BE IN ORDER. IN CONTRAST, WHEN A PRODUCT HAS SUBSTANTIAL HIDDEN COSTS BUT DISCOVERY AND ATTRIBUTION OF THESE COSTS AFTER PURCHASE ARE RELATIVELY EASY FOR CONSUMERS AND SELLERS ARE DEPENDENT UPON REPEAT BUSINESS, THERE IS LESS JUSTIFICATION FOR TERRITORIAL RESTRICTIONS, LICENSING, TRADEMARKS, AND TYING ARRANGEMENTS. REGULATORS SHOULD STRIVE TO DESIGN WAYS OF ENCOURAGING THE MARKET TO PROVIDE QUALITY PRODUCTS AND INFORMATION RATHER THAN ATTEMPT TO SUBSTITUTE THEIR JUDGMENT FOR THAT OF THE CONSUMER. FOOTNOTES ARE PROVIDED IN THE ARTICLE. (LWM)