LAW 525 Lecture Notes - Lecture 1: Market Failure, Small Claims Court, Externality

• School: Ryerson University
• Department: Law and Business
• Course: LAW 525
• Professor: Nick Iannazzo

Document Summary

Inter-firm sales arrangement (other firms sell their product for them) Terms, conditions, warranties & guarantees are stipulated. Consumer info is exchanged with third parties. Government has opportunity to intervene at any of the stages. Basic framework for market transactions arise from: Tort law: obligations imposed by the common law. Relying solely upon contract and tort law may be inadequate. The go(cid:448)er(cid:374)(cid:373)e(cid:374)t (cid:373)a(cid:455) create la(cid:449)s to further protect co(cid:374)su(cid:373)ers fro(cid:373) (cid:862)(cid:373)arket failures(cid:863) Negative externalities (unknown costs are assumed by consumer) Information failures (info. imbalance businesses know more than consumers) Go(cid:448)er(cid:374)(cid:373)e(cid:374)t atte(cid:373)pts to (cid:373)i(cid:374)i(cid:373)ize the (cid:862)tra(cid:374)sactio(cid:374) costs(cid:863) associated (cid:449)ith consumers protecting themselves. (cid:862)tra(cid:374)sactio(cid:374) costs(cid:863) costs incurred in trying to learn about a product or service government response e(cid:454). (cid:862)cooli(cid:374)g off(cid:863) periods, statutor(cid:455) (cid:862)causes of actio(cid:374)(cid:863), availability of small claims courts, class proceedings, ombudsman. Risk management for businesses: identify risks, evaluate risks, and respond to the risks: risk avoidance withdraw dangerous product, risk reduction modify product to reduce danger.