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CHAPTER 6
Consumers
Learning Objectives
After completing this chapter students should be able to:
Understand the basis for business’s responsibility to consumers and the imbalance of power
between sellers and buyers.
Trace the evolution of the relationship between business and consumer from a philosophy of
caveat emptor to the due care theory.
Glossary
1. caveat emptor: The principle known as “let the buyer beware.” When society accepts this principle,
sellers are free to deceive buyers and buyers are expected to be informed enough to asses the
quality of products on their own.
2. consumer sovereignty: The belief that consumers can and should control the market through their
purchases.
3. dependence effect: The belief that what consumers want can be influenced by the market. For
example, advertisements can manipulate consumers to make them want things that they wouldn't
Chapter Summary Points:
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1. The complexity of today’s economy and the dependence of consumers on business increase
business’s responsibility for product safety. Buyers depend on the unusual expertise of sellers to
assess the quality of products because they can no longer be reasonably expected to assess the
quality of merchandise on their own.
5. To increase safety, companies need to give safety the priority necessitated by the product,
abandon the misconception that accidents are solely the result of consumer misuse, monitor
closely the manufacturing process, review the safety implications of their marketing and
advertising strategies, provide consumers with full information about product performance, and
investigate consumer complaints. Some successful companies already put a premium on safety.
6. Business also has other obligations to consumers: Product quality must live up to express and
implied warranties; prices should be fair, and business should refrain from price fixing, price
gouging, and manipulative pricing; and product labeling and packaging should provide clear,
accurate, and adequate information.
11. Defenders of advertising see it as a necessary and desirable aspect of competition in a
free-market system, a protected form of free speech, and a useful sponsor of the media, in
particular television. Critics challenge all three claims.
Teaching Suggestions
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Many students will find it useful to be provided with an examination of the assumption that businesses
have a responsibility to customers beyond making a profit, which is a common assumption found in this
chapter. Shaw and Barry argue that businesses have a responsibility to refrain from deception, to sell safe
products, to sell products of adequate quality, and to sell products at fair prices based on this assumption.
This assumption is justified early in the chapter, but we should consider if it is compatible with Nozick's
libertarian theory of justice. If it's not, we have to decide if we should reject such corporate responsibility
or if we should reject a libertarian theory of justice.
Being responsible to consumers is often profitable because customers want to buy the best products at the
best prices. However, there are at least three considerations in favor of a moral responsibility towards
consumers beyond making a profit:
a. When we buy something, there's an implied warranty (contract) that we're buying something of
adequate quality and safety that can be used for a certain function. If you bought a TV set only to find out
it contained a time bomb, you would have a right to seek compensation for the damage it caused. If you
bought a TV and found out it was broken, you'd rightly seek compensation for being duped.
b. Consumers depend on the unusual expertise of manufacturers to assess the quality and safety of the
products they produce and it would be unreasonable to expect them to be able to assess the quality and
safety of the products they buy. For example, drugs require thorough testing to know their effectiveness
and side effects and consumers have neither the time, resources, nor expertise to find out the effectiveness
and side effects on their own.
c. Consumers depend on the products and services of businesses. There might have been a time when
consumers were self-sufficient and could survive in isolation. However, that's no longer the case.
Consumers need the food, clothing, and homes produced by others. Consumers therefore have little
This issue raises the question—Is it morally permissible for companies to exploit the vulnerability and
dependence of consumers? If so, what should we say about companies that sell unsafe or deadly products
without warning?
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Questions for Discussion
Introduction
Cigarettes are an especially dangerous product, and their manufacture, marketing, advertising, and sale
raise a number of acute questions relevant to the consumer issues discussed in this chapter. For instance,
what are the responsibilities to consumers of companies that sell potentially or (in the case of cigarettes)
inherently harmful products? To what extent do manufacturers abuse advertising? When is advertising
Strict Liability
The doctrine of strict product liability holds that the manufacturer of a product has legal responsibilities to
compensate the user of that product for injuries suffered because the product’s defective condition made it
unreasonably dangerous, even though the manufacturer has not been negligent in permitting that defect to
occur. Under this doctrine a judgment for the recovery of damages could conceivably be won even if the
Legal Paternalism
Anti-paternalism gains plausibility from the view that individuals know their own interests better than
anyone else does and that they are fully informed and able to advance those interests. But in the
increasingly complex consumer world, that assumption is often doubtful. Whenever citizens lack
Self-Regulation
Self-regulation can easily become an instrument for subordinating consumer interests to profit making
when the two goals clash. Under the guise of self-regulation, businesses can end up ignoring or
minimizing their responsibilities to consumers. For example, nothing enrages airplane passengers more
than being stuck on a runway because of bad weather and congested terminals, waiting for hours to take
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The Responsibilities of Business
Six points were given in the chapter that could go a long way in helping business behave morally with
respect to consumer safety. Examine and discuss one of these six points. Do you agree that this change
Manipulative Pricing
Many practical consumers think of the pricing practices and gimmicks mentioned in the text as a nuisance
or irritant that they must live with, not as something morally objectionable. But tricky or manipulative
Additional Resources for Exploring Chapter Content
Internet Resources
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