Consumer sovereignty

Consumer sovereignty is a normative as descriptive term used in economics. He said in a descriptive reading is that consumers (consumers) through their consumption decisions nature and extent of production control ( " primacy of the consumer interest" ). This means that the consumer is determined, prepared as much of what goods or services are offered. He also has an influence on the quality of the products.

In the normative economics dominated a meaning of consumer sovereignty as a liberal model: It is good if each person gets what she would like - as long as it moves within the boundaries that are drawn by the same bearing wishes of other people.

The term consumer sovereignty (English consumers' sovereignty ) was probably first used by William H. Hutt in the economic literature.

History of Ideas

Since the classical liberalism of Adam Smith both normative as descriptive aspects of the role of consumers in the economy are discussed. So Smith emphasizes that the satisfaction of the interests of consumers, the only purpose ( "sole end and purpose" ) was in production. Alone in relation to this task are the interests of the producers of concern. On the other hand, Smith points to functional and causal dependencies: demand in the market practice a steering effect on the type and quantity of production. By the "invisible hand" called de facto coordinating nature of the competition, the interests of the producers would be aligned with the interests of consumers and combines the individual interests to the general interest.

Wilhelm Röpke describes the consumer sovereignty as a " democracy of consumers ". Requires that recognize the wishes of the consumers, the producers had an apparatus, which indicates these wishes, and the only machine that could afford this was the market.

Demarcation consumer sovereignty consumer freedom

Sometimes the concept of consumer sovereignty is explicitly divorced from that of the consumer freedom.

Model of competition policy

As the consumer in this model controls the production, the state must only operate competition policies to ensure market concentration or monopoly can not be made. This can be done by a Cartel for example. In the normative sense, the guiding principle of consumer sovereignty includes a mandate to strengthen the steering role of the consumer in the event of the improper restrictions.

Realization

Depending on the market structure, the degree of consumer sovereignty is different. A high degree of consumer sovereignty is given under perfect competition, while a tender monopoly is accompanied by a loss of consumer sovereignty.

Is a key requirement of consumer sovereignty, that it comes to marketable goods. For non- marketable goods is, however, assume a market failure. This is assumed for example in social benefits.

Criticism

Critics of the idea of ​​Konsumentensouveränitat go often assume that it is connected to the perfect competition model. That is, there is a atomistic market and a perfect market. This assumes that there are no personal, temporal and spatial preferences of consumers and the goods are homogeneous. In addition, there is market transparency ( complete information). Also there is no "time lag ", this signifi that providers can respond without delay to reactions within the market. Furthermore, it must be that the entry is free.

Since the ideal models are never fully encountered in reality, it only makes sense when considering real economic systems, to inquire into the degree of consumer sovereignty.

Furthermore, lacking in reality, the complete transparency of the market. Depending on the actual conditions of a business, this may lead to more or less strong deviations from the ideal of consumer sovereignty. So missing the consumer for technically complex products often knowledge about where, under what conditions and with what quality standards, the products were manufactured, since consumers often has little time for the decision to purchase is available.

Competing idea

The antithesis to the idea of consumer sovereignty is the thesis of a producer sovereignty. Accordingly, the steering forces do not expect consumers but by the producers, which can shape the needs of consumers as required by marketing; the consumer did not have significant influence on production. From this idea the need for strong consumer protection is derived normative.