The Analysis Of Defective Products Recall System In Perspective Of Economics

The institution of Defective Products'Recall has been widely established and applied, and as it is proved, the institution plays an irreplaceable role in protecting consumers'rights, ensuring the steady development of market and making a standard economic order. It wasn't until 2004, when The Role of Recalling Car Products with Defects was unveiled, that the recalling system began to develop in China. The recalling system is rising to the legal stratification plane and definitely regulated due to the related regulations afterwards and especially the Tort Liability Law carried out in 2010, which actually guarantee the lawful rights and interests of consumers.The most significant difference between Defective Products Recall System and the existing rules aimed to protected consumer's rights is that this system is to protect in advance, it is a producer who has to recall the products with systemic flaw, which can effectively avoid the occurrence of accidents. The establishment of this system transforms the institution from traditional regulations which only focus on the individual consumer to the ones that concern about the overall interest of consumers, this transform reflects the nature of legal justice. If analyzed from point of economic, this system is established in line with the goal of maximizing efficiency, it balances the inequality between consumers and producers and reallocates between the two interests, which not only improves the consumers'rights, but also increase the benefits of producers to some extent, so as to improvement the overall welfare of the whole society and to achieve the Pareto improvement. This institution reflects justice of law, achieves the goal of economic efficiency, meanwhile combines perfectly of these two objectives together.In addition, to analysis in perfective of cost and revenue, due to in the early stage of legal construction, there are much to improve in the legal system, especially the civil law, the legal vacuum phenomenon is still very serious, therefore the marginal cost of establishing Defective Product Recall System is very low, correspondingly the marginal revenue significantly exceeds its marginal cost, which satisfied with rule of cost-revenue.However, if to analysis from supply and demand, there obviously exists short supply in the field of consumer protection, resulting in that consumer's rights are not protected effectively, while the existing Product Quality Law, Consumer Protection Law and other related systems also have much to improve, which especially in the interests of product defect disputes. This institution is established in the form of the legal in the Tort Liability Law in 2010, but in terms of China's current status of development on the defective products recall system, there are still some shortages when compared with developed countries, such as the unidentified standards and the rather narrow applied scale. After China's access to WTO, domestic products constantly integrate into the world market, meanwhile, overseas products do that, too. But overseas industries tend to discriminate domestic consumers when recalling defective products, which is due to the lack of institution on recalling defective products in China, consequently, we should learn the experience from the United States, Japan and other developed to improve our Defective Product Recall System. We look forward that this institution plays its unique role in a broader range.