Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/248852 
Year of Publication: 
2021
Series/Report no.: 
ZEW Discussion Papers No. 21-098
Publisher: 
ZEW - Leibniz-Zentrum für Europäische Wirtschaftsforschung, Mannheim
Abstract: 
This paper shows that the provision of consumer rights can decrease welfare when some consumers remain ignorant of these rights. We find that consumers uninformed about a mandated warranty demand excessively safe products in some circumstances. In other circumstances, uninformed consumers buy the efficient product variety like informed consumers but the former cross-subsidize the latter via firms' pricing. With respect to the salient policy option of improving information about consumer rights, we find that increasing the share of informed consumers may actually raise the risk of inefficiency.
Subjects: 
consumer policy
imperfect information
efficiency
product safety
distribution
JEL: 
D18
K12
K13
Document Type: 
Working Paper

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