MARK 4500 Lecture Notes - Lecture 7: Mattress Firm, Consumer Sovereignty, Consumer Protection
8 Mar 2018
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Six significant problems working against consumers striving for sovereignty. Informationally imperfect consumer markets: asymmetric power that favors business, disadvantaged consumers, the classical monopoly problem, consumer grievances, underrepresentation of consumer interest, asymmetric power that favors business. The firm supplies most of the information that consumers have at their avail like product labels/warranties/directions all meant to benefit the producer and not the consumer. Products are increasingly complex (to help keep the firm in the picture: more parts = more replacement parts. Lack the understanding, knowledge of products, time and bargaining capacity (ebay) Disadvantage may be due to personal characteristics (age, education, location) or broader characteristics (social status, subject to greater risks from addictive products: informationally imperfect consumer markets. Correlation between price and quality is near zero. Think about the cost of college education: technical complexity of modern products make it difficult to ascertain quality, price discrimination, affluence has increased number of choices.
