Consumer sovereignty is the state where the preferences of the consumers determine the goods and services that a company will produce (Heilbroner & Thurow, 1998). Consumers are said to know the best goods or services that will satisfy their needs. The theory of consumer sovereignty follows that the consumers make better decisions about their needs compared to the producers’ decisions. The producers’ success depends on their ability to determine the customer demand for products. Consumer sovereignty is seen as the reign of consumers over the economy (Heilbroner et al., 1998). The consumers reign by determining the goods and services that are going to be produced by the producers.
Consumer sovereignty is affected by interferences from the producers, government, and other environmental conditions (Heilbroner et al., 1998). Many consumers do not know what they really want. Therefore, they become vulnerable to the sales antics of the producers. The sellers can fool consumers through promotions and offers so as to make them buy their products. The consumers end up believing in the products that the producers are selling to them. In such cases, the consumers do not reign over the economy. The producers are the ones that control the products that the consumers buy.
Consumer sovereignty is affected by the government in cases where the government wants to promote certain products. The government can impose policies that promote some products and strain the production of other products (Heilbroner et al., 1998). An example is where the government lays out policies to promote the local industries. It imposes high taxes on imports so as to make these products too expensive for the consumers to buy. The idea behind this action is to make the consumers buy products from local industries. The consumers end up buying products that they do not like because the products they like are too expensive.
References
Heilbroner, R. L., & Thurow, L. (1998). Economics Explained: Everything You Need to Know About How the Economy Works and Where it is Going. New York: Prentice Hall
