The Law and Economics of Consumer Law

Consumer protection laws have a deep regulatory impact on the functioning
of markets. The law and economics approach is a particularly apt methodology
to study the inefficiencies in consumer markets and to investigate the potential effects of regulatory intervention on consumer welfare. This contribution discusses the traditional consumer law and economics approach with its strong grounding in rational choice theory, complemented with insights from information economics. On the basis of this approach, it can be determined to what extent consumer protection rules are in harmony with the normative criterion of economic efficiency and to what extent market intervention is warranted. Through the economic analysis of consumer law, the aim to improve the level of consumer protection can be pursued while accounting for the welfare effects of regulation. In this way, valuable contributions to consumer policymaking can be made, which from both a legal and an economic perspective can be justified.