Broadening Consumer Law: Competition, Protection, and Distribution

Rory Van Loo*

Policymakers and scholars have in distributional conversations traditionally ignored consumer laws, defined as the set of consumer protection, antitrust, and entry-barrier laws that govern consumer transactions. Consumer law is overlooked partly because tax law is cast as the most efficient way to redistribute. Another obstacle is that consumer law research speaks to microeconomic and siloed contexts—deceptive fees by Wells Fargo or a proposed merger between Comcast and Time Warner Cable. Even removing millions of dollars of deceptive credit card fees across the nation seems trivial compared to the trillion-dollar growth in income inequality that has sparked concern in recent decades. This Article synthesizes the fragmented empirical literature to offer a broader conception of consumer law’s place in governance. The data indicate that consumer market failures raise prices to consumers by well over a trillion dollars annually, aided by sophisticated algorithmic pricing; that this overcharge worsens economic inequality; and that consumer law, despite prominent critiques of its shortcomings, can reduce overcharge when designed well. The preliminary state of the evidence underscores the need for regulatory monitoring of markets to calibrate consumer law’s potential as a tax alternative. Redistribution is one of the government’s most basic functions, and efficiency one of the law’s guiding principles. There are strong normative foundations for making macroeconomic distribution an explicit goal of consumer law.

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© 2019 Rory Van Loo. Individuals and nonprofit institutions may reproduce and distribute copies of this Article in any format at or below cost, for educational purposes, so long as each copy identifies the author, provides a citation to the Notre Dame Law Review, and includes this provision in the copyright notice.

*Associate Professor of Law, Boston University; Affiliated Fellow, Yale Law School Information Society Project. For valuable input on prior drafts, I am grateful to Rebecca Haw Allensworth, Anne Alstott, Vivek Ashok, Ian Ayres, Joseph Bankman, Oren Bar-Gill, Molly Brady, Chad Carr, Conor Clarke, Megan Ericson, Matt Evangelisto, Jacob Hacker, Henry Hansmann, David Hoffman, Keith Hylton, Al Klevorick, Robert Lawless, Yair Listokin, Angela Littwin, Daniel Markovits, Mira Marshall, Michael Meurer, Edward Morrison, Morgan Ricks, Gordon Silverstein, D. Daniel Sokol, Holger Spamann, Fred Tung, Shreya Vora, David Walker, Lauren Willis, and Kathryn Zeiler for helpful comments on prior drafts, and to participants at the American Bankruptcy Institute’s Young Bankruptcy Scholars Conference (2014), Yale Law School Consumer Law Reading Group (2015), the Yale Institution for Social and Policy Studies (2015), Stanford/Yale/Harvard Junior Faculty Forum (2017), The Future of Law & Economics and the Legacy of Guido Calabresi Conference (2017), and the Next Generation of Antitrust Scholars Conference (2018). Jacob Axelrod, Caroline Blake, Samuel Burgess, Phoebe Dantoin, Christopher Hamilton, Tyler Stites, and Gavin Tullis provided excellent research assistance. Earlier drafts were titled “Consumer Law as Tax Alternative.”