False advertising

Andrew Rhodes () and Chris Wilson

Post-Print from HAL

Abstract: There is widespread evidence that some firms use false advertising to overstate the value of their products. We consider a model in which a policy maker can punish such false claims. We characterize an equilibrium where false advertising actively influences rational buyers and analyze the effects of policy under different welfare objectives. We establish precise conditions where policy optimally permits a positive level of false advertising and show how these conditions vary intuitively with demand and market parameters. We also consider the implications for product investment and industry self-regulation and connect our results to the literature on demand curvature.

Keywords: Misleading Advertising; Product Quality; Pass-through; Self-Regulation (search for similar items in EconPapers)
Date: 2018
Note: View the original document on HAL open archive server: https://hal.science/hal-03263861v1
References: View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Published in The RAND Journal of Economics, 2018, 49 (2), pp.348-369. ⟨10.1111/1756-2171.12228⟩

Downloads: (external link)
https://hal.science/hal-03263861v1/document (application/pdf)

Related works:
Journal Article: False advertising (2018)
Working Paper: False Advertising (2016)
Working Paper: False Advertising (2015)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-03263861

DOI: 10.1111/1756-2171.12228

Access Statistics for this paper

More papers in Post-Print from HAL
Bibliographic data for series maintained by CCSD ().