Consumer Policy Toolkit

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09 July 2010
9789264079663 (PDF) ; 9789264096066 (HTML) ;9789264079656(print)

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The markets for goods and services have undergone significant changes over the past 20 years. Regulatory reform, global markets, new technologies and growth in the role of services in economic activity have driven the changes which, in many instances, have provided significant benefits to consumers. Relatively little attention has been paid to the challenges these developments have posed for consumers. More choice and more complexity in many markets have made it increasingly difficult for them to compare and assess the value of products and services. The challenges for consumers have raised similar challenges for the government authorities responsible for protecting them from unfair commercial practices and fraud.

This book examines how markets have evolved and provides insights for improved consumer policy making. It explores, for the first time, how what we have learned through the study of behavioural economics is changing the way policy makers are addressing problems.

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  • Foreword
    One of the principal functions of governments of market-based economies is to establish and maintain economic frameworks that promote innovation, productivity and growth, for the ultimate benefit of consumers. To this end, they have passed laws and created authorities to protect consumers from fraudulent and misleading commercial practices and unsafe products and to promote transparent markets that enable consumers make informed decisions. On the supply side, they have focused on preventing industry concentration and anti-competitive business practices that restrict choice and inflate prices.
  • Preface
    As policy practitioners we are all aware of the growing challenges we face today in protecting consumers. With rapidly changing consumer markets that demand higher levels of knowledge and skill on the part of consumers and where public expectations of the protections available to consumers are growing, policy makers are increasingly expected to respond with greater speed and effectiveness.
  • Executive Summary
    Consumers play a vital role in economies, accounting for more than 60% of the GDP of OECD countries. When they are empowered, consumers can improve economic performance by helping to drive competition and business innovation. This, however, requires an effective consumer policy regime in which consumers are protected from unfair marketplace practices, are in a position to make well-informed decisions and both business and consumers are aware of their rights and responsibilities.
  • The Changing Consumer and Market Landscape
    This chapter reviews key market and consumer trends that have been observed, primarily focusing on the main problems that consumers and consumer authorities are confronting. The more demanding markets for consumers have raised related challenges for policy makers; those responsible for consumer protection must quickly respond to a rapidly changing and highly sophisticated marketplace.
  • The Economics of Consumer Policy
    This chapter examines the economics underlying consumer policy. It identifies the core elements that distinguish an economic approach from others (such as rightsbased legal frameworks) where economic reasoning is less prominent or nonexistent. It discusses the underpinnings of consumer policy in modern neoclassical economics, as well as insights from new research into consumer decision making from the field of behavioural economics.
  • Identifying and Analysing Consumer Market Problems
    The purpose of this chapter is to i) define what consumer detriment is; ii) indicate how markets can be screened to detect problems where detriment may be present; and iii) provide suggestions on how market problems can be analysed and how detriment can be measured. Screening, analysis and measurement are essential parts of the policy making framework presented in Chapter 5, as they provide the basis on which decisions to introduce a policy measure should be made. They can also play an important role in helping to determine which of the policy measures described in Chapter 4 might be most effective in addressing a problem.
  • Consumer Policy Instruments
    This chapter presents the range of key policy tools that are available to consumer authorities to address problems in the marketplace, outlines how these tools can be used effectively and identifies some of their potential impacts. It also examines the role of enforcement strategy in addressing problems.
  • Consumer Policy Decision Making
    The purpose of this chapter is to provide a step-by-step process that policy makers can employ to help determine whether or not they should intervene in a market to address a specific problem and, if a policy intervention is warranted, to help determine what policy instrument, or instruments, should be used.
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