Consumers are the largest constituency in any economy: there are more consumers of a product than there are producers. Yet, discussions on trade policy, and trade negotiations in particular, tend to be dominated by producer interests, often to the neglect of producer interests? How do we explain this paradox? And how does can we assess the impacts of Brexit on consumers?
The main reason that consumer interests carry less weight than we would expect is because they tend to be diffuse, whereas producer interests are concentrated. This gives them more weight politically, particularly when such concentration happens on a regional basis. This political economy argument explains, to some extent at least, why countries are often reluctant to engage in unilateral trade liberalisation, even if the overall effects are positive.
Trade agreements are seen as one way of overcoming this problem. The idea is that they help create a coalition of interests between domestic consumers and exporters (who gain overseas market access) in a way that could overcome resistance by protectionist constituencies. Intra-EU liberalisation has proceeded in substantial part on this basis.
The negotiations between the UK and the EU on trade will involve revisiting current arrangements, and there is considerable uncertainty regarding future arrangements. And because the range of issues covered by future negotiations will be extensive, the channels through which consumers can be affected are numerous.
For example, changes to tariff and non-tariff measures can impact the conditions of competition in goods and services markets, and thus affect prices. There may also be implications for the way in which the UK approaches regulation, in specific sectors such as the utilities or food, and on cross-cutting matters such environment, product safety or consumer protection.
The articles in this section present analyses of consumer impacts. Beyond the actual evidence, the articles present frameworks that help us analyse the consumer impacts of trade policy scenarios.