The FDA Bans BPA in Baby Bottles

The details are reported here.  Such bans on specific production inputs raise interesting economics issues related to “technology forcing” and industrial competition.  I am an optimist that there are many different ways to make a relatively low cost baby bottle.  In a a world with 7 billion people, if somebody can figure out a low cost method that imposes a lower pollution threat to young children then I would hope that this person’s firm will grow rich.   If consumers are unaware about the threats that they face because of products they buy then even a free market economist will be concerned about market outcomes.  If people know “that they do not know” what is contained in products they consume then risk averse people will demand more information about these products.  Since knowledge about a product’s safety is a public good, there is a role for government to step in to supply this information. Like Santa Claus, it can classify products as “naughty” and “nice”.  If people don’t know that they don’t know what is in specific products, then issues of benevolent paternalism arise.  Such individuals will seek out the cheapest products and be unaware that they may be hurting their kids.  In this case, there is a stronger case for product Bans.

How costly is it for manufacturing firms to comply with such regulations? This is a relevant issue for California as the green chemistry initiative launched by DTSC continues.  In 2010, J.R DeShazo and I presented our views about the economic impact of such regulation. We are optimistic that this will be a “net win” for California but predicting the path of endogenous technological change is not an easy task!