Consumer Protections and Economic Growth

Productivity growth has been particularly weak in the UK ever since the financial crisis in 2007 and this held back incomes and economic growth. Policymakers are rightly exploring the different ways to remedy this productivity problem. One often overlooked tool is improving consumer protections, which can be productivity-enhancing by improving competition and by engendering a consumer base which is ready and willing to try new firms, products and services. 

Dynamic, well-functioning markets need both the demand and supply sides to work which means that consumer and competition policy are inextricably linked. Each functions better with support from the other, and both can contribute to more efficient markets, greater productivity, and stronger economic growth. Businesses, particularly the most efficient who want to compete on a level playing field, stand to gain just as much as consumers from strong consumer protections that are properly enforced.

However, consumer protections have not kept up with the digital transition, are not as strong as they should be and are not enforced effectively. These weaknesses mean that both consumers and the good businesses who want to compete on a level playing field are losing out - to the ultimate detriment of UK economic performance.

In this report we set out how effective consumer protections can support economic growth, and how they need to be improved.

Foreword

The conundrum of how to fix the country’s productivity puzzle has preoccupied policymakers for years, with successive governments suggesting various ideas to solve it. Yet the UK continues to lag many of its G7 partners. 

The new government has said it is placing economic growth at the heart of its agenda – but it will not achieve that unless consumer and competition rules are fit for the modern age. 

In a functioning economy, competition and consumer protections are inextricably linked, working together to foster efficient markets, greater innovation, productivity and ultimately stronger economic growth.

When we buy a product or service, as consumers we trust that the company is not misleading us and that the description of the product is accurate. But that is not always the case. For example, fake reviews, which artificially inflate the quality of a product or service, have been allowed to run rife online because regulators have not been given the tools to deal with them effectively.

Companies making it hard for customers to exit a contract (but often easy to sign up to a product or service) inhibits their ability to shop around and weakens the need for firms to improve their products and services, and could lead to higher prices.

These negative experiences not only leave consumers disappointed and irritated, but they also weaken competition because they diminish the ability of companies who have invested in creating good products to stand out from the crowd. Furthermore, they weaken consumer confidence and make us all less likely to try new products and services for fear of something going wrong.

For consumer protections to be truly effective, three things must happen. First, the consumer protection rules need to be updated so that they offer adequate protection for consumers online. Second, the Competition and Markets Authority must be given tougher powers to clamp down on companies failing to comply with consumer protection laws. The alternatives, such as dragging claims through courts, have been proven ineffective and are time-consuming and resource intensive. Finally, consumers must be able to exercise their rights and get redress when it’s due. Alternative Dispute Resolution needs to be available more widely and the processes for using it made simpler and more consistent.

The benefits of reforming consumer protections do not just amount to giving consumers more confidence by giving them more choice for lower prices, but also levels the playing field for smaller businesses to compete with larger ones. Creating a fairer economy will also encourage investment. If the new Government is serious about unlocking economic growth, then it should make the reform of consumer protections a priority. 

Rocio Concha, Director of Policy and Advocacy, Chief Economist

1. Introduction

The UK’s productivity growth has been particularly weak ever since the financial crisis in 2007 and this has held down real-household disposable incomes. Similar slowdowns in productivity growth have been seen across the world, but the stagnation has been particularly acute in the UK when compared to other G7 nations [1], and wage growth has suffered as a result [2].

Figure 1 - UK Productivity 1981 - 2021 [3]

The productivity problem has led to much debate but few solutions, and the consequences are becoming more acute as the economy is increasingly buffeted by external shocks including Covid-19 and the war in Ukraine. Poor income growth over the past 15 years means that the current cost of living crisis is biting harder with increasing numbers of households facing financial hardship [4].

The way out of this is through productivity growth and the Government needs to use all the tools it has available to stimulate this, including encouraging greater investment and innovation. One such tool is consumer policy, as consumer protections can be productivity enhancing by improving competition and by engendering a consumer base which is ready and willing to try new firms, products and services.

There are considerable benefits to reap here. Consumer spending accounts for around 60% of UK economic output, so even minor gains could have large consequences [5]. However, the role that consumer protections play in fostering a well-functioning market economy is often neglected by policymakers. Too commonly there is a perception that competition rules promote efficiency, but that consumer protections, while necessary to stop egregious business practices, are a burden for companies and inhibit investment and innovative behaviour. This framing is wrong.

Dynamic, well-functioning markets need both the demand and supply sides to work and consumer and competition policy are inextricably linked. Each functions better with support from the other, and both can contribute to more efficient markets, greater productivity, and stronger economic growth. Businesses, particularly the most efficient who want to compete on a level playing field, stand to gain just as much as consumers from strong consumer protections that are properly enforced.

These arguments are not new. In 2009, the Office of Fair Trading noted that ‘competition and consumer policy together provide a framework for markets to deliver maximum benefits for consumer welfare and productivity growth [6]’. Similar arguments were made by William Kovacic [7] in 2007, who wrote that “consumer protection laws are important complements to competition policy [8].” However, we feel that a reminder of the economic potential of better consumer protections has value in these challenging times. In this briefing paper, we restate the reasons why improved consumer rights and enforcement can stimulate economic growth.

Consumer protections describe the set of rules and tools which prevent or punish unfair behaviour from firms against consumer interests. In the UK, this covers a wide range of rules and protections, from setting standards on product quality and safety, specific consumer protection regulations like the Consumer Protection from Unfair Trading Regulations, to certain rules put in place by sectoral regulators. Of course, rules on their own are not sufficient to punish or deter mistreatment of consumers. They need to be backed by effective enforcement powers, and agencies that are sufficiently resourced to discharge those powers. Private enforcement (e.g. collective redress schemes) can also be an important lever for consumers and their advocates to discourage bad behaviour by seeking damages. There is also a wider benefit to consumers knowing and understanding their rights, and being able to assert them. If consumers understand when a firm is attempting to mistreat them, then they will be better empowered to punish the firm’s behaviour by taking their custom elsewhere.

Moving forward, we should not lose sight of the interrelated roles that consumer and competition policy can play to improve economic performance. Much has been made of opportunities to reform the UK’s competition policy following its departure from the EU, but less has been discussed about the vital reforms to the UK’s consumer protection regime which are needed to fully deliver for consumers and the wider economy.

2. Consumer protections can stimulate competition

It is widely accepted that effective competition between businesses in an economy is good for productivity growth [9]. When firms compete with one another on a level playing field, they are incentivised to improve their productive efficiency in a way that offers the best products and services at the lowest cost.

The Government can encourage competition through merger and antitrust policy. Strong competition rules and good enforcement are very important but are not sufficient to create competitive markets on their own. Competition also depends on the demand side of a market working effectively, and competition policy needs to work hand in hand with a well-designed consumer protection regime. Consumers must exert sufficient pressure on firms, and consumer protections are needed to make this happen. 

As described by Vickers (2021), consumers are ‘imperfect' [10]. They cannot survey all information perfectly, are subject to normal behavioural biases and can be misled by firms. This means that there are opportunities for firms to take advantage of these ‘imperfections’ in ways that disrupt the competitive process. The ways in which firms can do this can be split broadly into two types of practice:

• Practices which increase search or switching costs for consumers by, for example, the obfuscation of information or imposition of unfair contract terms.
• Practices which deliberately mislead consumers about the quality or price of the goods or services on offer, for example through misleading advertising or false product information.

The first of these makes it more costly for consumers to fulfil their role in a competitive market whilst the second reduces their ability to do it. The mechanism differs, but the end result is the same: inefficient firms get away with selling lower quality goods and services at higher prices because consumers find it harder to give their custom to better, more efficient firms. 

Incumbent firms with large customer bases stand to gain most from acting in ways which make it harder for their customers to go elsewhere. While they collect excessive returns from their customers, challenger firms may struggle to gain a foothold and find the customers they need to grow. If switching costs are high, this can deter new firms from even trying to enter the market in the first place [11].

Supporting entry and expansion should be an important part of stimulating the UK’s poor productivity growth. The IFS Deaton Review (2022) found huge inequalities between firms in terms of both size and productivity, including a rise in ‘superstar’ firms and a reduction in the share of economic activity in young firms since the financial crisis. This may have contributed to the extremely sluggish productivity growth the UK has experienced since then [12]. New businesses which survive the early years can develop into high-growth firms that have a positive effect on overall productivity growth [13].

These practices cause consumers harm in the short run, but the whole economy loses out longer term because efficient firms aren’t rewarded for their good practices and inefficient firms have less pressure to improve. It has a corrosive effect on productivity and holds back economic growth.

2.1. Practices which increase search and switching costs

Higher switching and search costs are inextricably linked with weaker competition in markets. Many of the CMA’s most recent Market Investigations, including the Energy Market (2016), Retail Banking (2017) and Funerals (2020), have found low levels of consumer engagement, barriers to switching or poor availability of information to consumers all leading to ‘adverse effects on competition.’

In energy, the adverse effect on competition caused by weak customer engagement was summarised as giving ‘suppliers a position of unilateral market power concerning their inactive customer base which they are able to exploit through their pricing policies or otherwise.’ When consumers cannot compare and switch easily between rival products, services or firms, competition will not function in a way that incentivises firms to improve.

In the most part, it falls to consumer protections to remedy or prevent practices which impose additional search or switching costs on consumers. As mentioned, the Markets regime in the UK has picked up many of these issues, as have sectoral regulators in the regulated industries. For example, Ofcom introduced rules in 2020 that mandated mobile and broadband providers to notify their customers in advance when their contracts were coming to an end [14].

However, issues which impact upon consumers’ ability to search and switch are not just confined to regulated sectors. Many of the consumer harms identified in the Reforming Competition and Consumer Policy paper from BEIS [15] are directly related to issues with search and switching:

• Issues with subscription contracts, where consumers can be automatically renewed onto a new term, or even locked-in indefinitely, are designed to make it difficult for consumers to shop around and that weakens the competitive pressure on incumbents. This is particularly clear in instances where a company makes it very easy to sign up for a contract, but introduces new frictions when it comes to a consumer wishing to cancel and move to a new provider.
• Various types of manipulative online choice architecture, such as sludge, push consumers towards choices or introduce unnecessary levels of friction into the process of comparing prices or quality [16] Examples noted by the CMA in its response to the government consultation included “use of messages, webpage loading times and dripping of information to dissuade consumers from comparing products from other traders, and use of defaults to persuade consumers to agree to automatic renewal of contracts, when it may not be in the consumer’s best interests to do so.” These techniques are used extensively in many online markets [17] and require a modernised consumer protections framework to deal with them adequately.
• Drip pricing, where all charges are not disclosed in the headline price, is particularly pernicious. The CMA singles it out as a practice with a “distortive effect on upfront competition and search costs for consumers” and which may need to be added to the schedule of unfair commercial practices in the Consumer Protection Regulations [18]. That the regulator’s work showing these practices to be harmful began more than a decade ago at the Office of Fair Trading [19], starkly illustrates the limits of a consumer protection system which has not been flexible enough to cope with the pace of change in consumer markets.

2.2. Practices which deliberately mislead consumers

Businesses can also subvert competition by misleading consumers. It is easier to tell a customer a product is good rather than to invest in making it good, and weak consumer protections can allow inefficient businesses to thrive by giving misleading information about quality or by framing high prices such that they appear competitive. If the information used by consumers when choosing what to buy is inaccurate, then they will be unable to determine the best product or service. This is to the detriment of consumers who don’t get value for money, but it also undermines competition. There will be less pressure on businesses to find ways to improve quality or to make processes more efficient. Ultimately, higher-performing businesses are not fairly rewarded, to the detriment of wider economic performance.

Misleading practices will be easier to perpetrate in markets in which there is greater asymmetry of information, where products are more complex or elements of quality and price aren’t directly observable by consumers. However, evidence of such misleading behaviour can be found throughout the economy with abundant examples, including in markets in which consumers receive professional advice and in regulated industries.

• The CMA’s work on leasehold property has shown that, even where consumers typically have the expert help of a conveyancer, many buyers were not made aware of highly important and financially consequential elements of the contract. This included unfair clauses around ground rents, which left some leaseholders unable to sell their homes, and in some instances consumers not being told upfront that the property was leasehold. Some of these practices were found to be widespread among some of the largest freeholders in the country.
• Broadband providers routinely advertised connection speeds using misleading ‘up to’ figures [20]. If a provider with a good product wished to advertise in this market with honest information about its speeds, it would be disadvantaged by making its product look slower than its competitors.

The potential for businesses to adopt misleading practices is especially large in digital markets. Businesses can produce mis-information on a greater scale in digital markets and they can control the consumer journey through the design of online choice architecture. For example, fake online customer reviews are pervasive in online retailing. Extensive research by Which? has found that the online customer review system is frequently gamed by online sellers [21], and fake reviews are highly effective at getting consumers to choose poor quality products over better quality ones at the same price [22]. Such outcomes cannot be good for competition. Small businesses have expressed concerns about fake reviews online, with more than one in five saying they are a problem [23].

3. Consumer protections support innovation

Beyond the direct relationship between consumer protections and competition, levels of innovation will also be influenced by the effectiveness of consumer protections.

It has long been established in both the economics and marketing literature that consumers are risk averse [24], while behavioural economics has also shown that consumers are loss averse and place too much weight on outcomes which are certain [25]. In the context of consumers trying new products and firms, consumers take measures to reduce risk, such as staying loyal to particular brands [26].

This means that consumers will be reluctant to try new firms and innovative services if they have worries about the efforts firms have made to ensure products work as marketed and how they will be protected should things go wrong. This reduces the incentives for firms to bring new products to the market and invest in innovation [27], which is highly important in the current UK context of low productivity growth since technological progress and innovation drive long-run improvements in productivity.

There is some evidence of consumer caution holding consumers back at various points in adoption cycles. For instance, earlier in the adoption cycle of the internet, low levels of trust affected people’s use of a wide range of internet services [28]. Even in recent years, a small number of people still self-exclude from using the internet due to concerns about safety. According to the Lloyds UK Consumer Digital Index 2021, worries about security and privacy have been consistently at the top of the reasons for people not using the internet from 2016 to 2021.

More recently, worries about the safety of sharing information with firms have held back adoption of innovative retail banking products using Open Banking. By allowing third party access to consumers’ financial information, these services have the potential to increase competition in a retail banking sector where levels of switching are low and concentration is high. Consumers who use the services report being able to shop around more and minimise fees and costs, demonstrating their benefit to consumers and their ability to reduce market inefficiencies [29]. However, adoption of the services is still niche because of low willingness among consumers to share financial information linked to concerns over the safety and security of their data [30].

Consumer fears around the use of their data are far from the only issues they face in online markets. There are concerns among regulators that other practices in digital markets, like the use of algorithms to set prices, could erode trust in a way that actually leads to people dropping out of elements of digital participation [31]. With a whole raft of new so-called web3 innovations beginning to come into use, it will be important for consumer protections to keep up if consumers are to adopt without fear of being ripped off. The current state of cryptocurrencies is already acting as an early warning for what can happen in unregulated spaces. If crypto becomes a by-word for scam activity and rip-offs, then its genuine use-cases may struggle to ever take hold. Edelman’s Trust Barometer 2020 found around three quarters of UK consumers believe cryptocurrency needs more regulation, with levels of trust among the lowest of the 26 countries surveyed.

Consumer adoption of new technologies will also be key in the transition to net zero carbon emissions. These new technologies are of course important for the environment, but they also have the potential to be productivity enhancing [32]. However, poor consumer experiences when trying new products and services might create a significant barrier to that adoption. For example, huge changes to home heating and insulation are required across vast numbers of UK homes. This involves millions of consumers choosing and hiring traders to come into their homes, often at significant expense. However, worries about experiencing a bad job can make consumers put off having work done. Our own research found that among people who had employed a trader in the last year, 30% reported that they had ever put off or delayed a job in the home that needed doing because of worries about employing someone who would let them down or rip them off [33].

Even marginal improvements in consumer perceptions of risk could be economically meaningful as there is potential for spillover effects on innovation take-up. Research has found that consumer adoption of new products and services is contagious, and that boosting adoption among a small group can have a bigger stimulating effect than just bringing those few new consumers into the market [34]. Social learning and social influence can also lead to one person’s adoption having spillover effects onto others.

Spillover effects can also work in the opposite way. When consumer protections fail to prevent companies misbehaving, this can have damaging effects on an entire industry. One US study showed that an increase in toy recalls due to safety concerns reduced consumption across the industry, including by 25 per cent in firms which did not have any toys recalled [35]. In the UK, it is notable that in the wake of the horse meat scandal of 2013, consumption of ready meals was still suffering a year later [36]. More broadly, research finds that product crises which generate negative publicity are often damaging to competitors as well as for the individual company that engaged in the wrongdoing [37]. 

These examples also highlight the role for consumer protections in supporting levels of consumption, beyond just those new and innovative firms. Good protections, which are well-understood by consumers and well-enforced by authorities give consumers the confidence to participate across the whole economy. Ultimately, good, productive and innovative businesses stand to benefit from effective consumer protections if these lead to a more confident consumer base which tries new products, firms and innovations.

4. Improving the UK’s consumer protections

The preceding sections have set out how deficiencies in the UK’s consumer protection regime could be holding back its economy. Consumer protections have not kept up with the digital transition, are not as strong as they should be and are not enforced effectively. These weaknesses mean that both consumers and the good businesses who want to compete on a level playing field are losing out – to the ultimate detriment of UK economic performance. Consumer protections need strengthening in response to problems in three main areas:

• Weaknesses in the existing rules and regulations that mean harmful practices are left unaddressed;
• Inadequate public enforcement because of an absence of CMA powers and insufficient resourcing for Trading Standards;
• Inconsistent and weak private enforcement opportunities for consumers and their representatives.

Weakness of existing rules and regulations

Consumer protection regulations have failed to keep up with the pace of change in digital markets. A range of harmful online practices for consumers have proliferated over recent years, including fake reviews, subscription traps, drip pricing and other misleading online choice architecture. The current consumer protection rules have proved themselves inadequate to protect consumers against these practices, which as explained in chapter 2, are also harmful to competition and the effective functioning of markets. 

The harms from these practices have been known about for a long time. For instance, the Office of Fair Trading evidenced the harm from drip pricing more than a decade ago. However, the fundamental weakness of the UK’s consumer protection regime is that it is not flexible enough to meet challenges as they emerge, and instead it needs to be periodically updated long after practices have become entrenched and are already damaging markets. The National Audit Office has noted this need for rules to be forward-looking in its principles for effective regulation [38].

Therefore, while it is important now to update the list of unfair commercial practices in the Consumer Protection from Unfair Trading Regulations (CPRs) to tackle fake reviews, subscription traps and drip pricing, the Government should also take the opportunity to future-proof consumer policy. It has recently committed to introducing delegated powers for the Secretary of State at BEIS to update the CPRs with specific prohibitions on fake reviews and subscription traps. Such delegated powers would improve the flexibility of the regime. 

Another significant impediment to the effectiveness of the consumer protection regime is that large online platforms like search engines and social media sites have far less responsibility for protecting their users from harm than is commensurate with their size and role in bringing consumers and businesses together. Indeed, under the current framework, they have far less responsibility for protecting consumers than traditional retailers, despite their important role. 

These companies are often well placed to detect and prevent harms from reaching consumers in the first place, but the current rules leave far too much ambiguity around where responsibility lies. Many of these emergent deceptive online practices could be cut off at source if online platforms had clear legal responsibilities to ensure they take responsibility for consumer rights. This should include a duty to proactively ensure compliance with consumer law on their sites.

A lack of public enforcement power for the CMA and resourcing for Trading Standards

Perhaps the largest deficiency of the current regime is the CMA’s lack of enforcement powers in consumer rights cases. It currently has no administrative fining powers against companies who breach consumer law, and often relies on lengthy court processes to get firms to cease illegal behaviour. 

Fining powers help to disincentivise bad behaviour. Meanwhile, it is resource intensive and time consuming to go through the courts to issue directions to businesses to stop clearly harmful behaviour. For example, it took nearly six years, and the threat of legal action, for Viagogo, a well known secondary ticket selling company, to finally change its practices and follow CMA guidance on the information it gives consumers.

The CMA’s lack of proper enforcement powers fundamentally weakens the deterrent effect for companies acting against the rules. In the CMA’s own words, “not having fining powers does not really make a case for compliance. Essentially, companies are sitting there and waiting to see whether we go after them or not [39].”

The Government has committed to giving the CMA proper administrative powers, including fining businesses for non-compliance and the ability to direct businesses to stop unlawful practices without going through the courts. It is essential that these commitments progress if consumer protection rules are to have any real impact on businesses, competition and the economy.

Importantly, it is not just the CMA which has responsibility for enforcing consumer rights. Local and National Trading Standards services are responsible for the majority of consumer protection enforcement in the UK. Trading Standards Officers play a vital and highly visible role in the field, visiting businesses and ensuring they are compliant with the rules. However, major deficiencies in Trading Standards have emerged over time, and the system now lacks the structure and resources to address the challenges facing consumers in a modern economy. Local trading standards services in the UK have lost 56% of full-time equivalent staff since 2009 and twenty services have reduced funding by over 60% since 2011. Whilst National Trading Standards ensures some coordination of regional and national issues, it is also reliant on local authority services and has no statutory footing. The whole trading standards system urgently needs reviewing to ensure that the rules are enforced in the best interests of consumers and businesses across the UK.

Inconsistent and weak private enforcement opportunities for consumers and their representatives

For strong consumer rights to be truly effective they must be easily understood by consumers and easy to act upon when a consumer knows they have been mistreated. This means disincentives for firms to engage in bad behaviour are not just present from the risk of being fined, but from having a customer base who knows when to seek redress or take their custom elsewhere. 

Private enforcement, therefore, should be an important part of effective consumer protection. Consumers should not just be reliant on authorities to take on cases, but be able to hold companies to account through private routes like Alternative Dispute Resolution or collective redress actions. These allow consumers to assert their rights and also act as an additional incentive for businesses to comply with the rules. 

However, a major weakness with current consumer law is that consumers do not have rights to claim collective redress for breaches of consumer law in the same way they do for breaches of competition law. As the Government progresses with plans to improve the CMA’s abilities to fine companies for breaches of consumer law, this would also be an opportune time to give collective redress rights to consumers.

Beyond this, it is clear that not every breach of consumer protections can be enforced by the CMA, Trading Standards or privately through the courts. Alternative Dispute Resolution then becomes highly important in allowing consumers to assert their right outside of the formal legal process. However, at present, Alternative Dispute Resolution is only available across some industries and often has very low awareness amongst consumers when it is available [40]. Much wider availability and consistency of these schemes would improve the current consumer protection framework.

5. Conclusion

Consumers are far from the only beneficiaries of a system that protects them against malpractice from firms. Good consumer protections play a vital role in fostering a well-functioning market economy, where firms compete fairly by becoming more efficient, innovative and ultimately more productive. They can also engender confidence in consumers to try new firms, products and services in ways which can benefit businesses that want to grow. 

However, there are severe weaknesses in the current consumer protection framework in the UK, which mean we are failing to harness the full economic potential of the regime. The rules are out of date and enforcement severely lacking, holding back fair competition in markets and damaging consumer confidence. Improvements are needed, not just for consumers but for the benefit of the whole economy.

With productivity growth still suffering more than a decade on from the financial crisis, the UK needs to exploit the policy options at its disposal to push for a productivity-based plan for economic growth. As the UK recovers from the Covid-19 pandemic and the cost of living crisis, it needs a long-term plan to reform and energise the supply side of the economy. To harness a healthy culture of entrepreneurship and innovation, which benefits consumers and businesses, we must ensure that not just our competition regime – but also our consumer policy – is fit for the modern world.

Footnotes

[1] ONS (2022), International comparisons of UK Productivity, final estimates: 2020  ↑

[2] This can be most acutely observed in the figures for average weekly earnings, which were fractionally lower at the start of 2022 than their pre-financial crisis peak. Office for National Statistics, Real Average Weekly Earnings, Total Pay Seasonally Adjusted. In 2015 prices average weekly earnings were £521 in January 2022 and £522 in February 2008  ↑

[3] Office for National Statistics, Output per hour worked, UK whole economy, Index 2019 = 100  ↑

[4] Which? (2022), Consumer confidence and financial wellbeing, March 2022  ↑

[5] Based on the consumption measure of GDP in the ONS National Accounts  ↑

[6] Office of Fair Trading (2009), Joining up competition and consumer policy: the OFT’s approach to building an integrated agency  ↑

[7] William Kovacic is Professor at George Washington university and was formerly chair of the US Federal Trade Commission and a non-executive director at the Competition and Markets Authority  ↑

[8] Kovacic, W.E. (2007), Competition Policy, Consumer Protection, and Economic Disadvantage, Washington University Journal of Law & Policy, 25  ↑

[9] A good summary of the literature on these links is available in OECD (2014), Factsheet on how competition policy affects macroeconomic outcomes  ↑

[10] Vickers, J. (2021). Competition for imperfect consumers. International Journal of Industrial Organization, 79, 102739  ↑

[11] Bedre-Defolie, Ö., & Biglaiser, G. (2017). Contracts as a Barrier to Entry in Markets with Nonpivotal Buyers. The American Economic Review, 107(7), 2041–2071  ↑

[12] De Loecker, J., Obermeier, T. and Van Reenen, J. (2022), ‘Firms and inequality’, IFS Deaton Review of Inequalities  ↑

[13] Mortimer Lee, P., & Pabst, A. (2022), Covid-19 and Productivity: Impact and Implications, Preface, National Institute of Economic and Social Research Occasional Paper LXII  ↑

[14] Ofcom (2019), Helping consumers get better deals  ↑

[15] Department for Business, Energy and Industrial Strategy (2021), Reforming Competition and Consumer Policy  ↑

[16] CMA (2022), Online Choice Architecture: how digital design can harm competition and consumers  ↑

[17] CMA (2022), Evidence review of Online Choice Architecture and consumer and competition harm  ↑

[18] CMA (2021), Reforming Competition and Consumer Policy consultation response  ↑

[19] Office of Fair Trading (2010), The impact of price frame on consumer decision making  ↑

[20] ASA (2017), Major change to broadband speed claims in ads  ↑

[21] See all of at Which?’s articles on fake reviews  ↑

[22] Which? (2020), The real impact of fake reviews  ↑

[23] FSB (2019) Destination Digital: How small firms can unlock the benefits of global e-commerce  ↑

[24] See for instance Luigi Guiso & Monica Paiella (2005). The Role Of Risk Aversion In Predicting Individual Behavior, Economic working papers 546, Bank of Italy  ↑

[25] Kahneman, D., & Tversky, A. (1979). Prospect Theory: An Analysis of Decision under Risk. Econometrica, 47(2), 263–291  ↑

[26] See for instance Sheth, J. N., & Venkatesan, M. (1968). Risk-Reduction Processes in Repetitive Consumer Behavior. Journal of Marketing Research, 5(3), 307–310  ↑

[27] Australian Productivity Commission (2009), Review of Australia’s Consumer Policy Framework  ↑

[28] See for example, Gourdazi, S. et al (2013), Impact of Trust on Internet Banking Adoption: A Literature Review, Aust. J. Basic & Appl. Sci., 7(7), 334–347  ↑

[29] Open Banking Implementation Entity (2021), The Open Banking Impact Report October 2021  ↑

[30] Financial Conduct Authority (2021), Financial Lives 2020 Survey  ↑

[31] Competition and Markets Authority (2021), Algorithms: How they can reduce competition and harm consumers  ↑

[32] F.W. Geels, J. Pinkse, D. Zenghelis (2021) Productivity opportunities and risks in a transformative, low-carbon and digital age. Working Paper No. 009, The Productivity Institute  ↑

[33] Yonder on behalf of Which? polled a nationally representative sample of 6,018 consumers of which 3,594 had a job done in the previous 12 months. Fieldwork conducted 25 June to 6 July 2021  ↑

[34] Young, H. P. (2009). Innovation Diffusion in Heterogeneous Populations: Contagion, Social Influence, and Social Learning. The American Economic Review, 99(5), 1899–1924  ↑

[35] Freedman, S., Kearney, M.S., & Lederman, M. (2009) Product Recalls, Imperfect Information, and Spillover Effects: Lessons from the Consumer Response to the 2007 Toy Recalls. NBER Working Paper No. w15183  ↑

[36] Financial Times (2014), Horsemeat scandal weighs on UK ready meal sales  ↑

[37] Z. Yang et al (2022), When do product crises hurt business? A meta-analytic investigation of negative publicity on consumer responses. Journal of Business Research 150 (2022) 102–120  ↑

[38] National Audit Office (2021), Good practice guidance: Principles for effective regulation  ↑

[39] House of Commons (2022), Oral evidence given by CMA Chief Executive Andrea Coscelli to the Business, Energy and Industrial Strategy Committee  ↑

[40] Which? (2021), Are Alternative Dispute Resolution schemes working for consumers?  ↑

About

Which?

Which? is the UK’s consumer champion, here to make life simpler, fairer and safer for everyone. Our research gets to the heart of consumer issues, our advice is impartial, and our rigorous product tests lead to expert recommendations. We’re the independent consumer voice that works with politicians and lawmakers, investigates, holds businesses to account and makes change happen. As an organisation we’re not for profit and all for making consumers more powerful.

Authors

Matt Gardner, Stephen McDonald and Rocio Concha.

Citation

If citing this paper in your own work, our preferred citation is: Gardner, M., McDonald, S. & Concha, R., Consumer protections and economic growth, Which?, September 2022.