Misleading advertising in mixed markets: non-profit orientation and welfare outcomes

Ajay Sharma

International Journal of the Economics of Business, 2020, vol. 27, issue 2, 291-302

Abstract: In this article, we analyse misleading advertising competition between private firms (profit oriented) and consumer-oriented firms (concerned about consumer welfare) in the context of mixed markets. The nature of advertising in this article is assumed to be non-rival in nature and is beneficial to all the firms in the market. We find that, both private and consumer-oriented firms incur positive expenditure on misleading advertising. Further, the profit of consumer-oriented firms is higher than that of private firms. Moreover, irrespective of whether firms are concerned about consumer welfare or not, the level of misleading advertising is socially excessive.

Date: 2020
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DOI: 10.1080/13571516.2019.1674491

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