Cseres, Katalin J. --- "Consumer Protection in the European Union" [2012] ELECD 436; in Van den Bergh, J. Roger; Pacces, M. Alessio (eds), "Regulation and Economics" (Edward Elgar Publishing, 2012)

Book Title: Regulation and Economics

Editor(s): Van den Bergh, J. Roger; Pacces, M. Alessio

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781847203434

Section: Chapter 4

Section Title: Consumer Protection in the European Union

Author(s): Cseres, Katalin J.

Number of pages: 66

Extract:

4 Consumer protection in the European Union
Katalin J. Cseres



1. INTRODUCTION

Consumer protection has generally been understood as a wide range of differ-
ent regulatory tools to protect weaker market parties. Consumers have been
generally defined as natural persons acting for purposes outside their trade,
business or professions who should be protected when they are unable to disci-
pline firm behaviour in the market by simple mechanisms of reputation and
repeat sales and who cannot effectively enforce their rights. When social
norms do not work, governments may intervene in order to adjust the envi-
ronment where consumers bargain and conclude transactions. The economic
justification for intervening in consumer contracts is based on the idea that
regulatory tools can remedy the main sources of inefficient consumer
contracts such as high transaction costs and information asymmetries.
The law of consumer protection is of relatively recent origin and it can be
argued that the economics of consumer law has only recently been extended
and enriched into a widely discussed scientific area of law and economics. The
reason for that is to be found in the fact that neoclassical economics tradition-
ally rested upon the rational choice theory, assuming that consumers are ratio-
nal market players and know best how to increase their welfare in the market.
This theory has been now challenged by empirical research from behavioural
economics, which has questioned both rational choice theory as a behavioural
model as well as the legal regulatory framework of consumer protection.
Accordingly, this chapter ...