The “do nothing” or laissez faire approach to product safety seems especially unsuited to consumer markets...

The “do nothing” or laissez faire approach to product safety seems especially unsuited to consumer markets because perfect information and rational agency conditions are especially ill satisfied in consumer markets? Explain.
Program The “do nothing” or laissez faire approach to product safety seems especially unsuited to consumer markets because perfect information and rational agency conditions are especially ill satisfied in consumer markets? Explain.
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Accidents happening from consumer products take a big toll .In the US , every year,more than 20 million accidental injuries take place and death from injuries account for 100, 000 .Such deaths mostly occur due to injuries from consumer products.The consumers also have to bear additional costs as a result of misleading selling practices.The laissez fairie approach tries to provide product safety features that are demanded by consumers for the product they want to pay. The laissez faire approach assumes that the market for the consumers is perfectly competitive. However this assumption is incorrect.In the consumer markets, conditions of perfect information and rational agency are not present.Consumers do not get proper information because of misleading marketing practices.Choices which are not at all rational , are made by the consumers at times . This is due to the fact ,that irrational fears , irrational trusts grips the consumers as well as misleading market informartion .Again consumer markets have Oligopoly market structure and so there is lack of proper distribution and openness in the as expected by the laissez faire approach.The responsibility of consumer protection,lies in three views ie the contract view, the due care view and the social cost view and these views are not present in the laissez faire approach.

Rahul Sunny answered 1 year ago

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