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participants never again have any contact.  Most buying and

selling takes place as repeated interactions in an environ-

ment where reputation is important.  Customers who are

harmed not only withdraw their patronage, but tell others of

their experiences as well.  It is standard business lore

that sellers never hear from satisfied customers, but every-

one hears from unsatisfied ones.  The larger issue is that

companies maximize profits by having a long-standing repeat

customer base, not by taking advantage of every new custom-

er.  Though the consumer may be only an occasional customer

of device manufacturers' products, the doctors and hospitals

who prescribe the products and the pharmacies and drug

stores that retail them are repeat customers (or customers

not at all).

A reputation for honesty and fairness is necessary for

generating profits.  The longest established, most profit-

able companies enjoy good reputations.  For example, in the

market for home appliances, Maytag, General Electric, and

Kitchenaid provide quality products and enjoy good reputa-

tions.  When buying or replacing a major appliance, many

consumers consider the brand of refrigerator, range, or

dishwasher that has a long-standing reputation for quality.

When the reputation or product begins to slip, so do

the fortunes of the company, as in the case of U.S. car-

makers in the 1970s.  That is doubly true when a product

requires a long, expensive development and/or a costly

production run, as do some medical devices.  The concern is

not with simple devices like tongue depressors, but with

devices of greater complexity and risk, such as implantable

devices and diagnostic machines.  Reputation is more impor-

tant in the medical-device market than in many other mar-

kets.  To earn their return on investment in such devices,

manufacturers need to continue operation for a long while.

Such devices are not cars or jeans, sold in a market with

many different producers and consumers; they are highly

specialized products with relatively limited markets.

Generating a profit takes time and repeated interactions.

The drive for profit creates powerful incentives for busi-

nesses to market quality devices.

Although the market places no restrictions on entry, it

places many restrictions on success.  Under conditions of

free competition, there are no guarantees that a firm will

be profitable.  Those that prosper are those that provide

products and services that perform as advertised.

Government Approval Is No Guarantee of Efficiency or Safety