The Demand for and Supply of Assurance

MARKET FAILURE OR SUCCESS: THE NEW DEBATE, T. Cowen and E. Crampton, eds., Cheltenham, UK: Edward Elgar

22 Pages Posted: 12 Nov 2003  

Daniel B. Klein

George Mason University - Department of Economics

Abstract

Consumers want products and services that are safe and of good quality. Corresponding to such demand is the demand for assurance, before the fact, that the quality and safety will be as promised. This demand for assurance creates opportunities for entrepreneurs to profit by providing assurance - and they do so in a wide and largely unappreciated variety of ways. When it comes to assurance, the essential dialectic of the free enterprise system applies pretty well. I think governments' quality and safety restrictions on the freedom of contract, known to be so harmful, are unredeemed and should be repealed.

Keywords: Assurance, seal of approval, reputation, knower, trust

Suggested Citation

Klein, Daniel B., The Demand for and Supply of Assurance. MARKET FAILURE OR SUCCESS: THE NEW DEBATE, T. Cowen and E. Crampton, eds., Cheltenham, UK: Edward Elgar. Available at SSRN: https://ssrn.com/abstract=467802 or http://dx.doi.org/10.2139/ssrn.467802

Daniel B. Klein (Contact Author)

George Mason University - Department of Economics ( email )

4400 University Drive
Fairfax, VA 22030
United States

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