Consumer Policy Tools

Background Paper to Creating Confident Consumers

May 2003

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Options for Addressing Consumer Protection Problems

This paper does not discuss the issues underlying, or the process of, problem identification. It starts from the assumption that, in any given case, the problem has been properly defined and scoped. [1] Having said that, problem definition and scoping are important for two reasons:

• In the consumer policy context, the nature of the market in question (competitive, imperfectly competitive, or non-competitive) may impact on the overall approach. If the market is very imperfectly competitive or non-competitive, consumer problems may really be problems that have to be addressed by competition policy or economic regulation. [3]
• Clear and precise policy objectives will help in making a discriminating initial choice of instruments to serve the policy objectives, and in re-evaluating over time how well the chosen instruments are serving those objectives. [4]

Once a problem has been identified, policy-makers need to consider the range of interventions for addressing it. Identification of a problem does not create a presumption that government should regulate. [5] Instead, policy-makers should ask whether a market-based solution will emerge in a reasonably timely and effective form and whether that solution will be optimal. [6]

[1] For a discussion of problem definition, see: OECD, Recommendation of the Council of the OECD on Improving the Quality of Government Regulation (1995) OCDE/GD(95)95, at 14.

[2] [null].

[3] Hadfield, G, Howse, R, Trebilcock, M, "Information-Based Principles for Rethinking Consumer Protection Policy" Journal of Consumer Policy 21: 131-169, 1998, at 152.

[4] Trebilcock, M, Rethinking Consumer Protection Policy, paper delivered to the Consumer Law Conference, Auckland 2001, at 15.

[5] This assumption forms the basis of the OECD Recommendation on Improving the Quality of Government Regulation (supra at note 1). It is also an underlying principle of the information-based framework (Hadfield et al, supra at note 2, at 155). Note that this assumption also forms part of the government's current approach to regulation. See, for instance, Ministry of Economic Development, The Code of Good Regulatory Practice (1997).

[6] Supra at note 2, at 155.

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