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False Advertising

Andrew Rhodes () and Chris Wilson

No 15-614, TSE Working Papers from Toulouse School of Economics (TSE)

Abstract: There is widespread evidence that some firms use false advertising to overstate the value of their products. Using a model in which a policymaker is able to punish such false claims, we characterize a natural equilibrium in which false advertising actively influences rational buyers. We analyze the effects of policy under different welfare objectives and establish a set of demand and parameter conditions where policy optimally permits a positive level of false advertising. Further analysis considers some wider issues including the implications for product investment and industry self-regulation.

Keywords: Misleading Advertising; Product Quality; Pass-through; Self-Regulation (search for similar items in EconPapers)
JEL-codes: D83 L15 M37 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-mic and nep-mkt
Date: 2015-12, Revised 2017-10
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Related works:
Journal Article: False advertising (2018) Downloads
Working Paper: False Advertising (2017)
Working Paper: False Advertising (2016) Downloads
Working Paper: False Advertising (2015) Downloads
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