Competition policy is a key means of maintaining market vitality and protecting consumer rights. This article examines the impact of competition policy on consumers and its importance.
Policies implemented by the state to protect consumer rights include competition policy and consumer policy. Competition policy fundamentally focuses on ensuring vigorous competition in the market by regulating anti-competitive behaviors such as monopolies or collusion. Such competition policy ultimately benefits consumers and is therefore recognized as an effective policy for protecting consumer rights. For example, in a market with vigorous competition, diverse goods and services are offered, and consumers can purchase the most suitable products for themselves through various choices. This enhances market efficiency and contributes to improving consumers’ quality of life.
The contribution of competition policy to consumer rights and interests can be examined from two aspects: productive efficiency and allocative efficiency. First, productive efficiency refers to producing more with given resources without waste. Productive efficiency increases when more is produced for the same cost, or when the same output is produced at a lower cost. In a competitive market, individual firms pursue productive efficiency, such as cost reduction, to survive. The resulting savings are then utilized to enhance quality or lower prices to attract consumer choice. Thus, the productive efficiency induced by competition policy contributes to consumer welfare. While monopolies might achieve greater cost savings, this does not necessarily translate into consumer benefits like price reductions. Furthermore, monopolies may neglect innovation, whereas intense competition drives firms to continuously pursue innovation, leading to the development of new technologies and products that provide consumers with better choices. Therefore, monitoring and regulating monopolies remains essential.
Next, allocative efficiency refers to the distribution of resources in a way that increases people’s satisfaction. When a market becomes monopolistic, a monopolistic firm seeking profit maximization can create allocative inefficiency by raising prices without producing sufficiently. Conversely, when competition intensifies, increased production and lower prices accompany it, generating distributive efficiency that enhances consumer satisfaction. For example, when competition is promoted in the agricultural market, consumers can purchase fresher and more diverse agricultural products at lower prices. Therefore, the distributive efficiency induced by competition policy through market competition also contributes to consumer welfare.
While competition policy has thus played a vital role in protecting consumer interests, it alone does not fully realize consumer welfare. This is because certain problems persist regardless of how competitive the market is maintained. First, even if competition policy enhances consumer welfare overall, it can disadvantage specific consumers. For instance, products from firms forced out of the market due to competition may lack after-sales service, causing harm to some consumers. However, abandoning competition policy itself would be detrimental to consumers overall, so the state has no choice but to maintain it. Additionally, since new companies face high initial costs when entering the market, the state needs to support them to maintain market vitality.
Next, problems arise because consumers have weak bargaining power against companies, lack sufficient product information, and are easily exposed to impulse purchases or harmful products. To address this, measures like disclosing product origins or recalling harmful goods can be considered, though these are not directly covered by competition policy. For example, transparently disclosing the origin of food allows consumers to choose safer products. Such measures provide consumers with information to make better decisions, which in turn enhances overall market trust.
These issues necessitated separate policies to protect consumers by placing them on equal footing with businesses and providing redress for damages suffered. Consumer policy was established in response to this need. It primarily targets matters directly related to consumer protection, such as establishing consumer safety standards that businesses must adhere to and mandating the disclosure of product information. Furthermore, it can compensate for the limitations of competition policy by remedying consumer harm arising from impulse purchases or harmful products, conducting consumer education, and directly resolving disputes between businesses and consumers. Through consumer education, consumers become aware of their rights and can actively exercise them, ultimately contributing to enhancing the transparency and fairness of the entire market.
