Right to Repair Laws Cannot Become a Backdoor for Price Controls

In recent years, various “right to repair” laws have been passed in states across the country. These laws commonly set up mandates that force device manufacturers to collaborate with third-party repair shops by requiring that they make manuals, parts, or specialized software broadly available for acquisition. However, as companies adapt to comply with these burdensome mandates (or go beyond them), there has been increased scrutiny over companies’ responses, especially over the prices for the parts they are required to sell.

So-called right to repair laws are foolish in and of themselves. These laws task companies with the obligation to provide parts, tools, and documentation to third-party repair shops. On paper, this is a rather straightforward demand from policymakers: the company already produces these parts and tools, and, in some cases, provides them to affiliated shops, so it should now provide them to third parties.

Now, their negative impacts are being used to justify broad price controls, which will only deepen the consequences. One can expect scientific and technological innovation to grind to a halt, impacting industries beyond consumer electronics. The arguments made by policymakers on “fair and reasonable” price mandates are laying the foundations for more broad price controls or mandates over all commerce.

As it has been proven many times, price controls lead to degradation of quality and shortage of the goods subjected to controls. Price controls fail because bureaucrats and courts fail to see the whole picture of what goes into setting prices in the first place. Reactionaries trying to mitigate the damage they already caused by implementing right to repair laws will make the same mistakes.

In practice, making these parts and tools available at scale bring a plethora of new costs, both in the form of higher production costs and foregone revenues. The first group of costs is easy to evaluate and measure. However, the latter is often composed of unmeasurable or invisible costs which hampers regulators’ ability to correctly assess a “fair” price.

For example, consider the production and inventory management costs of the parts that are now to be distributed to third-party repair shops. While some of these laws have stipulations that they do not force manufacturers to create new parts or re-create parts for discontinued devices, they still mandate that manufacturers provide parts to third-party repairers as long as they provide them for first-party repair shops. Inevitably, that means manufacturers have to produce and manage the stock of more parts than they would under normal conditions. They also must forgo the potential profits they could have gained by dedicating their production chain to produce an additional device instead of producing spare parts. By stocking repair shops, companies are forfeiting the possibility of selling a new device. The manufacturer, to fulfill its fiduciary duty of maximizing profit for its shareholders and employees, then prices all visible and invisible costs into the price of the part.

For those right to repair laws that extend beyond consumer electronics and impact sensitive devices such as medical equipment, the consequences of price controls on spare parts could be catastrophic. Highly technical and complex machinery like medical equipment carries higher production costs, both because of costly inputs, difficult logistics, and the added costs of regulatory compliance. These high production costs make it so that dedicating production time and resources to create spare parts has a significant opportunity cost compared to using those productive capabilities to build an additional unit of a whole product. Thus, markups must be high enough that they justify the company steering already-limited resources toward producing those spare parts. If price controls are introduced, companies would have little incentive to build those spare parts, making the devices more difficult to repair.

As both forced commerce and an affront to companies’ freedom of association, right to repair laws should be rejected out of hand. However, once passed, introducing price controls would only serve to make matters. Politicians should stay away from such a misguided approach and recognize that they lack the necessary information to determine what constitutes a “fair” price. Only the market can do that. Introducing price controls will ultimately defeat the stated intent of these laws, by ultimately making products less repairable in making the production of spare parts economically nonviable.