Disclosure as a tool for enhancing consumer engagement and competition

Abstract

Finding ways to get consumers engaged in markets is a major current topic of debate. This article examines why consumer engagement is so important in driving effective competition in markets. It then considers some key categories of intervention that can enhance consumer engagement, and in particular the various roles that disclosure can play. Recent examples are provided from the UK, where many such engagement measures have been implemented. The article emphasizes the importance, when policy-makers are designing such interventions, of understanding how real consumers truly behave. It also highlights the relevance to competitive outcomes of two further concepts: relative salience and relative consumer engagement. Finally, the article draws on both the successes and the failures of past interventions to identify some lessons for policy-makers when stepping into this area.