Transactional fairness in consumer markets

Lyons, Bruce and Sugden, Robert (2023) Transactional fairness in consumer markets. Behavioural Public Policy. ISSN 2398-063X

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Abstract

There is growing public concern about the 'unfairness' of many pricing practices that have become common in consumer, particularly digital, markets. Industrial and behavioural economists have developed theories that explain the conditions under which these practices are profitable for firms, and their implications for consumer welfare. We identify a mismatch between the welfare economic principles used in this theoretical work and the normative perspective in which these practices are viewed as unfair. We develop a concept of 'transactional fairness', grounded in the normative approach of Sugden's Community of Advantage, that is reflective of public concerns. Transactional fairness is complementary to established criteria of economic efficiency and distributional equity but is based entirely on the relationship between individual buyers and sellers. It establishes clear principles with realistic information requirements that are appropriate for compliance by firms. Regulation based on this approach can help to restore public faith in markets.

Item Type: Article
Additional Information: Funding Information: This research was supported by the Economic and Social Research Council, grant number ES/P008976/1. The study done by R.S. was also partly funded by the European Research Council (ERC) under the European Union's Horizon 2020 research and innovation programme, grant agreement No. 670103. Acknowledgements: In developing the ideas in this paper, we have benefited from discussions with many UK regulators and government economists, particularly at the Consumer and Markets Authority, Department for Business, Energy and Industrial Strategy, Financial Conduct Authority, Ofcom and Ofgem. We thank Tim Vickers, Timothy Dodsworth and Rohan Grove for their comments on earlier versions of the paper.
Uncontrolled Keywords: unfair pricing,consumer protection,transactional fairness,digital regulation,behavioural welfare economics,economics, econometrics and finance(all),social psychology,political science and international relations,sociology and political science,social sciences (miscellaneous),applied psychology,3*,this paper addresses a major issue in market regulation arising out of recent developments in behavioural economics, and builds on sugden’s well-received book the community of advantage (winner of the american philosophical association’s 2019 joseph b. gittler prize). the main uk regulatory agencies have shown a lot of interest in the approach developed in the paper. behavioural public policy is a relatively new journal but is already recognises as a leading field journal. ,/dk/atira/pure/subjectarea/asjc/2000
Faculty \ School: Faculty of Social Sciences > School of Economics
UEA Research Groups: Faculty of Social Sciences > Research Centres > Centre for Behavioural and Experimental Social Sciences
Faculty of Social Sciences > Research Centres > Centre for Competition Policy
Faculty of Social Sciences > Research Groups > Behavioural Economics
Faculty of Social Sciences > Research Groups > Economic Theory
Faculty of Social Sciences > Research Groups > Industrial Economics
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Depositing User: LivePure Connector
Date Deposited: 29 Jun 2023 09:32
Last Modified: 12 Oct 2023 00:41
URI: https://ueaeprints.uea.ac.uk/id/eprint/92532
DOI: 10.1017/bpp.2023.23

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