THE RATIONALE FOR GOVERNMENT INTERVENTION IN SELLER-CONSUMER RELATIONSHIPS |
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| Authors: | Sylvia Lane |
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| Institution: | SYLVIA LANE is professor emeritus in the Department of Agricultural Economics at the University of California, Davis and Economist on the Giannini Foundation, University of California, Berkeley. At Davis her prime teaching responsibilities were Consumer Economics and the Economics of Consumption. She has been a director of Consumers Union and the Consumers Union Foundation and authored publications on the Economics of Consumer Class Actions, the case for Flammability Standards and food safety in the area of consumer protection. |
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| Abstract: | Government intervention in the form of consumer protection is appropriate where consumers have less than the required amount of information to protect themselves, where transaction costs act to reduce consumer self-protection below acceptable levels, where consumer welfare is not sufficiently considered in oligopolistic markets, where private costs and social costs diverge due to externalities, where a certain level of quality assurance is necessary if markets are to function and where riskier products removal from the market lowers firms' insurance premiums as well as serves the interest of public health and safety. Consumer protection is a public good which will not be available in optimal quantities without government intervention. |
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