Showing papers on "Consumer protection published in 1979"

Equilibrium comparison shopping

Abstract: The most important issue in the legal debates over the form consumer protection legislation should take is whether the state should specify the terms on which consumers may contract or cause the disclosure of information to them Proponents of disclosure argue that providing information will make markets more competitive The statutory preamble to the famed Truth in Lending Law (" TIL ") recites: " The Congress finds that competition among the various financial institutions and other firms engaged in the extension of consumer credit would be strengthened by the informed use of credit " Also, the recent Magnuson-Moss Warranty-Federal Trade Commission Improvement Act provides: " In order to improve competition in the marketing of consumer products, any warrantor shall fully and conspicuously disclose the terms and conditions of such warranty " Legal opponents of disclosure argue that consumers will not read the information provided Several studies of the "effectiveness " of TIL, summarized in the Report of the National Commission on Consumer Finance, are cited by both sides Those studies indicate that the number of people unaware of the Annual Percentage Rate paid on credit for recent purchases ranges from almost 90 per cent in poverty areas to 52 per cent in markets populated by relatively affluent buyers Opponents of disclosure argue that such low awareness levels are inconsistent with the existence of competitive markets The apparent force of this point is partly responsible for the schizophrenic nature of American consumer protection legislation The statutes quoted above, despite their paens to disclosure, also regulate the substance of consumer sales contracts For example, the Magnuson-Moss Act requires the disclosure of warranty terms, but also prohibits sellers in many cases from shifting purchase risks to buyers Proponents of disclosure regulation, however, argue that the awareness levels reported above will easily yield competitive outcomes Thus Senator Douglas, the principal legislative supporter of TIL, asserted, unfortunately without explanation, that a competitive market would exist if " only" 10 per cent of the consumers were " cost conscious " The inconclusiveness of this debate seems largely a function of the absence of rigorous analytical tools with which to answer the question how much information is enough Surprisingly little attention has been devoted to the issue in the economics literature This paper reflects the beginning of an attempt to resolve it In particular, it addresses two questions: First, what kinds of equilibria exist when various percentages of consumers are informed? Second, is reducing consumer search costs, the standard technique of modern disclosure legislation, useful in generating competitive equilibria? Both questions are central to the current public policy debate respecting the form which state intervention in consumer markets should take The equilibrium search models which have been developed in recent years are capable of addressing these questions rigorously This paper develops one such model which incorporates elements of fixed sample size search The emphasis on this search strategy

Equilibrium and welfare in unregulated airline markets

Abstract: This paper introduces and analyzes a monopolistically competitive model of airline markets which takes account of the product differentation effect resulting from variation in flight departure times, and the effects of flight frequency and load factor on service quality. The basic results are that (1) when the direct benefits (to consumers) of increasing flight frequency are exhausted, socially optimal choices of price and frequency result in zero profits for the industry, but (2) a noncooperative, free entry equilibrium always results in higher prices, lower load factors, and greater frequency than are socially optimal.

Lawyers and Consumer Protection Laws

Abstract: The conventional model of the practice of law views lawyers as those who apply legal rules in the service of client interests, checked only by the constraints of the adversary system. A study of the impact of consumer protection laws on the practice of Wisconsin lawyers shows this to be an oversimplification. Lawyers for individuals tend to know little of the precise contours of consumer protection law. They most often serve as mediators between buyer and seller, relying on general norms of fairness and good faith. Lawyers for businesses are more likely to make use of the law, but they are seldom called on to deal with particular disputes. Lawyers' own values and interests are reflected in the way in which they represent clients. As a result, reform laws which create individual rights are likely to have only symbolic effect unless incentives are devised to make their vindication in the long-range interest of members of the bar. Moreover, an understanding of the many roles played by lawyers also requires a more expanded picture of practice. The picture of the lawyer as litigator in the adversary system may itself serve largely symbolic functions.

Consumer protection: The issues

Abstract: This paper seeks to organize the discussion of the “issues” in consumer protection by identifying and analyzing the basic factors that have given rise to the demand for consumer protection. Five are singled out for discussion. They are: (a) the monopoly problem at both industry and retail levels; (b) informationally imperfect markets in which consumers are unable or unwilling to obtain and act upon the information that would enable them to make effective choices; (c) the consumer grievance problem, meaning the dissatisfaction that consumers often encounter in consumer purchases; (d) the underrepresentation of consumers and the consumer interest; (e) the desire to shelter vulnerable consumers — the poor, the aged, etc.

Respirable particulates generated by pressurized consumer products. I. Experimental method and general characteristics.

Abstract: Many products and materials are available in the widely used pressurized package or “aerosol” form. A simulated breathing zone model approach has been developed and used to characterize the particles to which a user may be exposed. Some products characterized under simulated “worst reasonable” conditions produced concentrations of particulates smaller than 6 µm aerodynamic diameter exceeding 50 mg/m3.

Evaluating Consumer Protection Programs: Part I. Weak But Commonly Used Research Designs

Abstract: In this two-part article, current methodological approaches to the evaluation of consumer protection reforms are critically reviewed. In Part I, three quasi-experimental research designs commonly used to evaluate consumer protection initiatives are examined. It is shown that these designs are inherently incapable of yielding strong conclusions about the effects of a law or regulation. In Part II, which will be published in the next issue, research designs which allow stronger causal inferences about the effects of a reform proposal are reviewed. Implications of the review are then discussed in terms of future public policy and evaluation research in the consumer protection area.

Market discrimination against the poor and the impact of consumer disclosure laws: the used car industry

Abstract: The poor pay more than the non-poor for many consumer products, and this disparity seems to be ignored by such consumer protection regulation as disclosure laws. Indeed, several lines of argument suggest that the poor will not benefit from disclosure regulation either because they lack the ability to use information effectively ("market irrationality") or because they are restricted to particularly flawed markets and products ("separate markets/products"). This paper examines income stratification in the used car markets in Wisconsin, Iowa, and Minnesota. We found that the poor did pay more for used cars, got less redress for defects discovered after purchase, and were less satisfied and more likely to believe something was misrepresented. Differences in product quality did not account for these results because the patterns persisted even after the model, age, and price of the purchased vehicles were held constant. Further, no evidence was found for "market irrationality" among the poor. No income differences were seen in buyers' discovery of defects before or after purchase, and low-income buyers complained at higher rates, albeit with less success, than did higher-income buyers. Furthermore, the adoption of disclosure regulation in Wisconsin did not increase or decrease price discrimination against the poor. These findings point to the need for more research on the causes of price discrimination and more attention to the problems of the poor in the design and implementation of consumer protection regulations.

Consumer protection: Corrective measures

Abstract: The failure of contemporary economies to give consumers “what they really want” manifests itself in a set of “consumer problems” that give rise to the demand for consumer protection. The pivotal problems: monopoly, informationally imperfect markets, consumer dissatisfaction or grievances, the underrepresentation of consumers, disadvantaged consumers. This article deals with the entire spectrum of measures designed to eliminate or correct these problems. It suggests criteria for assessing any corrective measure and deals generally with the merits and drawbacks of regulatory and legislative approaches before considering specific corrective measures. The body of the paper focuses on specific measures, giving examples and citing advantages and disadvantages. The paper is summarized by posing the crucial questions in consumer protection on which policy-makers and citizens alike must make up their minds.

The High Cost of Government Regulation

Abstract: Mr Wiedenbaum feels that the steadily growing intrusion of the public bureaucracy into the private sector, in matters ranging from environmental regulation to job safety, has inhibited the healthy growth of our economy The majority of public policy changes affecting business-government relations in recent years has been in the direction of greater government intervention - environmental controls, job safety inspections, equal employment opportunity enforcement, consumer product safety regulations, energy restrictions, etc Costs resulting from government regulations are analyzed by grouping them into three categories: (1) cost of administering the regulatory agencies; (2) indirect cost of compliance by the private sector; (3) induced effects of regulation Mr Wiedenbaum says the impetus for this government power over business has not come from the industries being regulated; those companies usually claim the benefits to them of the new regulation are negative Public policy tends to be dominated, he suggests, by organized and compact interest groups who attain their benefits at the expense of the more-diffuse and larger body of consumers The nature of those pressure groups has changed from business villians (like the railroad barons) to self-styled representatives of the Public Interest 2 figures, 5 tables

External Degrees: How Well Do They Serve Their Holders?.

Abstract: Many educational innovations were introduced during the past two decades in response to both the needs of new educational clienteles and to the demand for educational alternatives by some segments of the traditional student population. Of these innovations, none has been more controversial than the so-called external degree programs. Although many of the opponents have not been familiar with the structure of the programs or with the magnitude of enrollments, they quite correctly identified the fundamental difference between external degree programs and most other forms of nontraditional education: external degree programs tend to remove control over content and quality of programs from full-time faculties and traditional academic administrators. Conversely, the proponents of this form of nontraditional education saw it as the logical corollary of lifelong learning, much of which takes place outside the classroom. Although they seldom went so far as to advocate its adoption for the majority of college students, proponents were persuaded of its unique appropriateness for the older student who had failed to undertake or complete college work in his or her youth, but had the desire and perhaps better qualifications to do so at maturity. With consumer protection and accountability issues being raised more frequently, or at least more loudly in the area of higher education, the specter of student rip-offs and "diploma mills" became a serious concern

The Motivation for Zoning: Efficiency or Wealth Redistribution?

Abstract: Most private land development decisions are made subject to the existence of various types of land use controls, of which zoning is the most prominent example. Existing analyses of land use controls generally, and zoning in particular, have tended to concentrate on the static efficiency implications of the particular controls. We instead propose to examine zoning as a vehicle for the redistribution of wealth.1 Our choice is dictated not only by the belief that wealth redistribution represents a more powerful analytic construct than efficiency, but more importantly, that zoning is more properly analyzed as a process rather than a situation, the emphasis on which is more internally consistent with wealth redistribution than efficiency. An emphasis on process requires that we reconsider the logically prior questions of why and in what form land use controls are observed.2 We will maintain that answers to these questions in part determine efficiency and equity implications and that to compartmentalize notions of institutional selection, efficiency, and equity reduces both the power and insight of the analysis of land use controls. We will argue that: (1) zoning can be profitably examined from the regulatory taxonomy outlined by Jordan (1972); (2) zoning is an example of the transformation of rents into costs, a process recently examined by Krueger (1974), Posner (1975), Tullock (1975), and Hamilton (1976); and (3) zoning has a temporal dimension which dictates examining zoning as a process rather than a situation. Further, we are led to consider the nature of the institutional mechanism through which this process operates.. In section II, we develop the basic analysis of zoning based on Jordan's (1972) regulatory taxonomy. A graphical analysis is employed to illustrate the interrelationships between the capitalization premise and the impact of prior market structure. We also illustrate the externality rationale for zoning and the welfare cost of zoning restrictions under the two alternatives of zoning as consumer protection or producer protection regulation. While the existence of capi-

Postsecondary Education and "The Best Interests of the People of the States.".

Abstract: Under the reserve clause of the Constitution, the primary responsibility for education rests not with the federal government, nor with peer group agencies, but with the states and local governments. Soon after we had become a nation the Congress, through the Northwest Ordinance, provided public lands for the support of education in the new territories and enjoined the states to support forever education for the sake of the happiness of mankind and as essential to good government (Article III). The states have developed, particularly in the last half of the twentieth century, complex systems whose roots go back to the early republic with the University of North Carolina in 1795 and the University of Georgia in 1801. The states have also from the beginning played a basic role in relation to private higher education. It is in the states and by the states that educational institutions have been chartered, incorporated, licensed, and/or authorized to operate. The only exceptions are a few special institutions specifically developed to meet particular national purposes, as for example service academies. The involvement of states with the formation of schools and colleges is coexistent with their existence as states; as a matter of fact, it antedates their existence as states and goes back to the colonial period. The colony of Massachusetts not only authorized the first college in America in 1636 but also contributed financially to its founding and continued as a state to support the college into the first third of the nineteenth century.

Why is regulation introduced in the health sector? A look at occupational licensure.

Abstract: Economic theories suggest that the introduction of regulation can be analyzed in terms of the magnitude and distribution of its economic impact. This article uses this approach to consider the introduction of licensure in the health sector for clinical laboratory personnel. At the micro level, there is no evidence of active consumer support for licensure and it seems to have been introduced mainly at the behest of members of the occupation and bureaucrats involved in the regulation of laboratories. Bureaucrats appear to have acted largely on their own initiative and are the single most important group involved in the introduction of licensure. The large role of the occupation supports a "producer protection" model of licensure over a "consumer protection" model. But the independent role of bureaucrats suggests that actors in the public sector are also a major interest group who need to be included in any model of regulation. Their motives are complex, but in the past one of the attractions of licensure seems to have been low direct administrative costs, despite large indirect costs to consumers. At the macro level, recent changes in social policy, which may reflect broad class interests, have shifted these indirect costs increasingly to the public sector through programs like Medicare. These changes in the distribution of costs may explain a growing concern by bureaucrats about the efficiency of licensure and a shift away from this type of regulation.

Handicapped Children and Youth: Current-Future International Perspectives and Challenges

Abstract: Current and emerging trends that impact upon special education world wide are reviewed. These trends focus on prevention and research, normalization, community based service systems, parental rights, consumer advocacy, home training, curative approaches, and cost/service benefits. Coalitions of professional organizations are suggested as a means of meeting the challenge of international issues that face those individuals and communities involved in providing services to handicapped and gifted children.

Testing of hair dryers for asbestos emissions

Abstract: Tests were conducted on 30 hair dryers for the release of asbestos fibers into the effluent air to evaluate potential consumer exposure, for the Consumer Product Safety Commission A hair-dryer test system was developed, consisting of a clean air source, a sampling duct assembly, several types of monitoring equipment and filter samplers Generated samples were assessed by transmission electron microscopy capable of performing energy dispersive analysis of x rays and selected-area electron diffraction Of the 30 dryers evaluated, 23 were home-use hand-held appliances, three were table-top hooded models, one was a hobby heat gun, and one was a heavy-duty commercial salon style dryer The airborne asbestos concentrations generated by these dryers ranged from 0 to 011 structures/cm/sup 3/ and the mass concentrations ranged from 0 to 7652 nanograms/cm/sup 3/ No significant differences were noted whether the dryers were operated at high heat or at cycled heat

Residential solar energy users: a review of empirical research and related literature

Abstract: This report reviews 15 empirical studies of residential solar energy users and related literature on residential solar energy use. The purpose of the review is to summarize and analyze the experiences of residential solar users for helping formulate policies concerning the accelerated commercialization of solar technologies. Four of the studies employed case histories or focus group techniques. The 11 questionnaire studies represented interviews with over 1,600 owners of solar systems. The demographic characteristics of samples are listed and compared; research findings and conclusions are presented. Findings on user satisfaction and system performance, possible reasons for evidence of lacking correlation between them, and implications for consumer protection and future research are discussed. General findings are: (1) systematic research on the experiences of solar users is lacking - much research remains to be done; (2) the reported overall experiences of users has been very positive; (3) user reports indicate that system performance is generally good but there is some evidence that user reports are not accurate measures of actual performance; (4) a need exists for adequate consumer protection; (5) design or installation problems are evidenced in significant numbers of early solar installations; and (6) these problems evidently are resolvable. An annotated bibliographymore » describes 10 other studies in progress.« less

A Consumer Model For TV Audiences The Case of TV Violence

Abstract: A consumer behavior model is used to explore attitudes toward TV violence and censorship. Five viewing groups with distinct media use characteristics and TV attitudes were found in two separate samples. Findings suggest support for the anti- TV-violence campaign is not universal and that excessive violence is only one of four distinct viewer complaints about television programs. The study furnishes an example of how an expanded version of Hirschman's "exit, voice and loyalty" model can be used to investigate the political potential of various segments of the television audience.