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1 Bob Tollison, Funeral Industry Trade Rule 1 (1982)

handle is hein.usfed/fnlitr0001 and id is 1 raw text is: FEDERAL TRADE COMMISSION WASHINGTON, D. C. 20580 BUREAU OF ECONOMICS July 20, 1982 MEMORANDUM TO: Commission FROM: Bob Tollison SUBJECT: Funeral Industry Trade Rule RECOMMENDATION Because the rulemaking record does not provide unambiguous evidence that the benefits of the proposed Funeral Industry Trade Regulation Rule exceed the costs, I recommend that the Rule not be approved and the record closed. INTRODUCTION The staff of the Service Industry Practices Division identifies a number of allegedly unfair and deceptive practices by firms providing funeral services. Staff feels that these practices prevail in the marketplace because decisions must be made quickly while the consumer is under stress. As a result, staff concludes that consumers are dissuaded from search and thus may pay higher prices than they would otherwise pay and may purchase more services than they would otherwise buy. Symptoms of the alleged market imperfection include the lack of price advertising and price competition and the appearance of excess capacity. The proposed Rule is intended to remedy these problems by requiring unbundling of funeral service packages and by increasing the availability of price informa- tion over the phone and at the funeral home. I would like to suggest an alternative view of how consumers choose funeral services that comports with a number of observed characteristics of the funeral industry, including some of the symptoms described above. If this alternative explanation is correct, promulgation of the rule would impose costs on the industry (and ultimately on consumers) with little accompanying benefit.

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