Consumer Policy Remedies and Consumer Segment Interactions

Abstract

This paper introduces a framework for examining consumer and market problems as a function of consumer segment interaction patterns. Three patterns of interactions are described as consisting of positive, negative, or no spillovers among consumer segments. The efficacy of regulatory remedies is shown to be affected by the type and extent of these interaction patterns. The paper complements and extends conventional aggregate cost-benefit approaches in three ways: 1) by treating consumer interactions as a central feature of the market system; 2) by focusing on how various interaction patterns affect the distribution and intensity of spillovers among consumers; and 3) by describing how policy remedies can be used to facilitate or overcome these interaction patterns.