The Efficient Regulation of Consumer Information
![handle is hein.journals/jlecono24 and id is 497 raw text is: THE EFFICIENT REGULATION OF
CONSUMER INFORMATION*
HOWARD BEALES,
RICHARD CRASWELL,
and STEVEN C. SALOP
Federal Trade Commission
CONSUMER protection regulation has come under increasing fire from
Congress, the courts, and the business community. Regulations have
been criticized as costly, economically irrational, rigid, and paternalistic. '
One response to these charges has been a movement away from tra-
ditional forms of regulation and toward interventions that are more com-
patible with consumer and seller incentives. In particular, there has been
increased interest in techniques which ensure that consumers have
sufficient information to protect themselves against unsafe products or
unfair seller behavior.
Despite the general acceptance of this goal, analysis of how to
efficiently provide consumer information has lagged behind. Information
has traditionally been viewed as something which consumers either had or
had not; and if they did not have it, the only solution was (somehow) to
give it to them. Similarly, deception of consumers has been viewed as
undesirable simply as a matter of definition, with the proper response to
such deception being (obviously) to eliminate it.
While these simple prescriptions may be accurate as far as they go, they
mask many of the complexities involved in the ways in which information
is communicated to consumers and the ways that consumers (and the
market) respond. This paper explores some of those complexities in an
attempt to see how the legal system's efforts to improve consumer infor-
* The views expressed here are the authors' and do not necessarily reflect those of the
Federal Trade Commission (FTC), individual commissioners, or other staff. This paper
discusses ongoing research at FTC and elsewhere and thus reflects the contributions of
many of our colleagues. We acknowledge especially those who shared responsibility for the
FTC's Consumer Information Remedies (1979) and Post-Purchase Consumer Remedies
(1980) reports, which examine many of these issues in more detail, and Robert Pitofsky and
Richard Schmalensee for comments on an earlier draft.
I For a general critique, see Stephen Breyer, Analyzing Regulatory Failure: Mismatches,
Less Restrictive Alternatives, and Reform, 92 Harv. L. Rev. 549 (1979).
[Journal of Law & Economics, vol. XXIV (December 1981)]
© 1981 by The University of Chicago. All rights reserved. 0022-2186/81/2403-0006$01.50](ViewImageLocal?handle=hein.journals/jlecono24&div=34&collection=journals&method=preview&ext=.png&size=3)
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The Efficient Regulation of Consumer Information
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