ERIC Number: ED160718
Record Type: RIE
Publication Date: 1978
Reference Count: 0
Market Discrimination Against the Poor and the Impact of Consumer Disclosure Laws: The Used Car Industry. Discussion Paper No. 486-78.
McNeil, Kenneth; And Others
The poor pay more than the non-poor for similar products in many consumer goods markets. This disparity seems not to be addressed by consumer protection regulations like disclosure laws. Several lines of argument suggest that the poor will not benefit from disclosure regulation either because they lack the ability to use information effectively ("market irrationality") or because they are restricted to particularly flawed markets and products ("separate markets/ products"). This paper examines income stratification in the used car market in Wisconsin, Iowa, and Minnesota. It was found that the poor do pay more for used cars, get less redress for defects discovered after purchase, and are less satisfied and more likely to believe something was misrepresented. However, no evidence was found that price discirimination resulted from "market irrationality" of the poor or their restriction to separate markets and products. Furthermore, the adoption of disclosure regulation in Wisconsin did not increase or decrease price discrimination against the poor. These findings point to the need for more research on the causes of price discrimination and for more attention to the problems of the poor in the design and implementation of consumer protection regulations. (Author/GC)
Publication Type: Reports - Research
Education Level: N/A
Authoring Institution: Wisconsin Univ., Madison. Inst. for Research on Poverty.