Research On The Vulnerable Position Of Consumers

Combining the reality of current consumer markets with the theoretical bases including Marxist Political Economics, Microeconomics, Transaction Cost Economics and Information Economics, this paper aims to study the consumers’weak position. First, the paper dissects its causes and effects. Then, suggestions are given to the recovery of the principal position of consumers and the sound development of the market economy. Furthermore, the paper also discusses possible measures to stimulate the benign development of the new business. During the research, a number of methodologies have been applied, such as the normative and empirical approaches of research as well as the statistical analysis.Since 1990s, China has adopted the regime of the socialist market economy, which calls for the dominant position of the consumers, in other words, consumers’ demand serves as the main drive of the economic activities. But in reality, the consumers are in a relatively weak position. Moreover, the advanced productivity, especially the information technology, provides a great opportunity to create a new business model and change the weak position of the consumers. What’s more, real-world practice highly requires the guidance of study on the consumers’weak position. This study is conducted under the these realistic and academic background. Its value lies on several key points. Firstly, we try to prove the importance of changing the weak position of the consumers to the sound development of the economy. Secondly, we discover the inherent drawbacks of the traditional business model and find possible solutions. Thirdly, we build major indicators for measuring the weak position of the consumers and provide feasible measures to change the situations. In addition, we hope to provide guidance for real-world practice to remove the drawbacks in the market economy such as the information asymmetry, reduce transaction cost, optimize allocation of resources, increase economic efficiency, create a new business model and realize a kind of double-win-and-mutual-share development.The paper elaborates on the theories concerning the weak position of the consumers. To date, scholars have studied this issue quite fairly and paid growing attentions to the research of new business model. Current economic study, however, still remains profit-centered and treats the producers as the dominant players during economic activities. It fails to attach sufficient importance to the position of the consumers. Thus, there has been lack of in-depth and comprehensive research on the weak position of the consumers and hence lack of specific and effective measures to improve the situations. On the one hand, theories of monopoly, asymmetric information, transaction costs, behavior economy, supervision, and consumer domination would help work out the basic definition of consumer, analyze the reasons why consumers are put in a weak position and figure out what position should consumers be put in under the circumstances of healthy market economy. On the other hand, economics study should, as well, have the self-awareness of building a consumer-oriented and a double-win-and-mutual-share economic model. Thus, it is vital that one disclosed the relationship among consumers’ weak position and the issues of monopoly and information, transaction costs, consumer behavior and government behavior. While making use of these basic theories and analytical frameworks to provide a theoretical guidance for settling the issue of consumers’ weak position, it is a necessity that we have the innovation in discovering the business model, the defects of the whole economic system, and altering the weak position of consumers and the losing situation of each economic agent.In this paper, the consumers’weak position is studied by two analysis approaches. Firstly, by mainly applying the qualitative measures and combining that with quantitative measures, the realistic manifestations of consumers’weak position have been analyzed from two perspectives, respectively the strong position of the producers and the weak position of the consumers. It has also revealed the phenomena that producers take advantage of their strong position to mislead consumers, occupy the consumer surplus, as well as encroach upon the consumers’legitimate rights, such as the right to know the situation or carry out fair dealing, etc. Additionally, it has pointed out that consumers are confronted with many difficulties in the process of protecting their rights as the legal system remains incomplete and thus the cost is still rather high. Secondly, empirical analysis has been carried out via mainly applying the quantitative measures and combining that with qualitative measures. At the same time, the phenomenon of consumers’weak position and the seriousness of it have been demonstrated by making use of the economic statistics, modeling, and designing major indicators to measure consumers’weak position. Taking a false high price for example, on the basis of designing the false high price indicators and utilizing the logic of statistical inference and methods, we have carried out measurement and prediction of the price of goods in production link, as well as ratio of gain to cost, advance rate in wholesale and retail process, and we come up with several basic statistical conclusions--the phenomenon of false high price is common and even more serious in consumers goods market. There is a close correlation among information availability, the length of commercial chain, brand awareness and false-high price. The strong position of middleman damages the commercial efficiency and consumer well-being. And, false-high price is often accompanied with tough business situation.The causes for the consumers’weak position are manifold. This paper explains mainly from the non-professionalization of consumers, moral hazard and adverse selection resulted from information asymmetry, conformity consumption and passive consumption resulted from irrational consumption psychology, consumers’ lack of legitimate right resulted from dispersion. In addition, it further proves that redundant business links, transaction costs and power enjoyed by middlemen also account for this phenomenon.The paper dissects the socioeconomic influence of the weak position of the consumers on the micro, meso and macro levels. It is found that the old economic system and business model have led easily to many problems, such as the waste of economic resources, losses bore by various parties in the market, low economic efficiency and etc. On a microscopic level, the weak position of the consumers has reduced consumer surplus and consumer well-being. Besides, under such circumstance, producers are trapped into the vicious circle of irrational marketing in which they invest much but earn little. On a meso level, the adverse selection brought by the weak position of the consumers has caused many difficulties to the traditional business model. On a macro level, the weak position of the consumers has also increased transaction cost of the overall economy, caused huge waste of resources, reduced economic efficiency and to some extent, intensified mutual mistrust in the society.Learn from foreign experience, we can find some good ways to change the consumers’weak position and eliminate its negative effects, especially in terms of the improvement of laws and regulations to better protect the consumers’rights, the third-party organization and the education on consumers. These examples can provide significant reference to China.Last but not least, the paper puts forward a series of countermeasures for consumers’weak position. With practical issues of China concerned, to change the consumers’weak position, it is necessary to combine the advantages of legal and administrative means as well as market and social forces in a coordinated way, and pay attention to solving the deficiencies and "failures" of those means. The paper emphasizes the importance and full use of the market. To change consumers’ weak position requires the use of new means of market, the rebuilding of new commercial formats and the compensation of market missing ring. To change the unilateral nature of consumer goods market and fundamentally reverse the situation of the consumers’ weak position, it is imperative to compensate the missing ring in the operation of the market and establish a market-oriented consumers organizations platform.The consumer organizations need to be marketized and specialized in order to solve the problem of asymmetric information, simplify the procedures during transaction, reduce the power of the middlemen and the transaction costs. These organizations adopt a market-oriented pattern with sharing of information and profits, which encourages openness and participation-all these can help protect the principal position of the consumers. Such organizations will develop their own ways of earning profit; by offering services as follows--reduce the transaction costs and consumption costs, take advantages of the economy of scale, strengthen consumers’ability to bargain, provide useful information and other additional services. Within the regime of market economy, these consumer organizations will play a positive role in improving the situation of the consumers.