Consumer sovereignty
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Consumer sovereignty is a term which is used in economics to refer to the rule or sovereignty of purchasers in markets as to production of goods. The term can be used as either a norm (as to what consumers should be permitted) or a description (as to what consumers are permitted).
In unrestricted markets, those with income or wealth are able to use their purchasing power to motivate producers as what to produce (and how much). Customers do not necessarily have to buy and, if dissatisfied, can take their business elsewhere, while the profit-seeking sellers find that they can make the greatest profit by trying to provide the best possible products for the price (or the lowest possible price for a given product). In the language of cliché, "he who pays the piper calls the tune."
To most neoclassical economists, complete consumer sovereignty is an ideal rather than a reality because of the existence -- or even the ubiquity -- of market failure. Some economists of the Chicago school and the Austrian school see consumer sovereignty as a reality in a free market economy without interference from government or other non-market institutions, or anti-market institutions such as monopolies or cartels. That is, alleged market failures are seen as being a result of non-market forces. However, it has also been argued (e.g., by Goutam U. Jois) that even a "pure" market system violates the consumer sovereignty norm.
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- Campbell R. McConnell and Stanley L. Brue (1999, 14th ed.), Economics. McGraw-Hill, p. 68.
