Imperfect information about consumer rights: Implications for efficiency and distribution

Arbeitspapier

This paper shows that the provision of consumer rights can decrease welfare when some consumers remain ignorant of these rights. We find that consumers uninformed about a mandated warranty demand excessively safe products in some circumstances. In other circumstances, uninformed consumers buy the efficient product variety like informed consumers but the former cross-subsidize the latter via firms' pricing. With respect to the salient policy option of improving information about consumer rights, we find that increasing the share of informed consumers may actually raise the risk of inefficiency.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: ZEW Discussion Papers ; No. 21-098

Classification and Topics

• Classification: Wirtschaft ; Consumer Protection ; Contract Law ; Tort Law and Product Liability; Forensic Economics
• Subject: consumer policy ; imperfect information ; efficiency ; product safety ; distribution

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Baumann, Florian ; Friehe, Tim ; Wenzel, Tobias
• Event: Veröffentlichung
• (who): ZEW - Leibniz-Zentrum für Europäische Wirtschaftsforschung
• (where): Mannheim
• (when): 2021

Further information

• Handle: http://hdl.handle.net/10419/248852
• Last update: 10.03.2025, 11:45 AM CET