79 Nw. U. L. Rev. 1235 (1984-1985)
Market for Consumer Product Evaluations: An Analysis and a Proposal

handle is hein.journals/illlr79 and id is 1245 raw text is: Copyright 1985 by Northwestern University School of Law                      Printed in U.S.A.
Northwestern University Law Review                                         Vol. 79, No. 5 & 6
Thomas L. Eovaldi*
This Article focuses on the question of whether evaluations of con-
sumer products by third parties are undersupplied by the market, and, if
so, what responsive steps could be taken by government to deal with the
problem. Evaluations may be undersupplied because consumers underes-
timate the value of acquiring additional information and a market exter-
nality in the form of free-riding is present. The free-riding problem is
discussed in light of a recent decision1 which denied preliminary injunc-
tive relief against free-riding by a product seller on the efforts of an evalu-
ation producer, Consumers Union (CU): this free-riding took the form
* Professor of Law, Northwestern University. B.S., University of Illinois (1962); LL.B., Uni-
versity of Illinois (1965). The author would like to thank Charles Peters for his invaluable assistance
and Professors Marshall S. Shapo and Anthony A. D'Amato for helpful comments on earlier drafts
of this article.
The editors of the Law Review have invited the faculty to submit articles which are somewhat
speculative in nature and less than completely thorough in documentation. This article reflects my
tentative thinking about the availability of consumer product evaluations and speculates as to the
effectiveness of various alternatives for obtaining the production of optimal amounts of evaluative
information. My interest in markets for information originated with the teaching of the Deceptive
Trade Practices course at the Law School. That course considers the law of deception, including the
tort of deceit, the law of unfair competition, and other legal doctrines involving false representations
and deceptions by sellers, nondisclosure of information, and other instances in which an information
disparity allegedly exists as between buyers and sellers. While the law has a strong role to play in
keeping our economy free of false representations by sellers, antifraud law has a role to play only
when consumers are lacking truthful information. In other words, consumers who are fully in-
formed will not rely on false representations made by sellers. From a policy perspective, it may be
more important for law to help structure the marketplace so that sufficient accurate information is
available to consumers than to worry about subtle issues in antifraud law. Some economists are
boldly suggesting that antifraud law might be counterproductive in at least two ways. First, con-
sumers may possess exaggerated notions of the scope and effectiveness of such laws and may feel that
the law is insuring accuracy in seller communication when in fact it is not very effective. Second, a
mistaken reliance on the effectiveness of antifraud laws might lead to an underestimation of the value
of having information produced and made available for purchase by independent third parties. This
Article raises questions about whether the legal system can do more to increase the supply of inde-
pendently produced consumer product evaluations.
I Consumers Union, Inc. v. General Signal Corp., 724 F.2d 1044 (2d Cir. 1983), cert. denied,
105 S. Ct. 100 (1984).


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