Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/161936 
Title: 

False Advertising

The document was removed on behalf of the author(s)/ the editor(s).

Year of Publication: 
2017
Publisher: 
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften, Leibniz-Informationszentrum Wirtschaft, Kiel und Hamburg
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 policymaker is able to 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.
Subjects: 
Misleading Advertising
Product Quality
Pass-through
Self-Regulation
JEL: 
M37
L15
D83
Document Type: 
Preprint

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The document was removed on behalf of the author(s)/ the editor(s) on: November 1, 2017


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