Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/215747
Authors: 
Baumann, Florian
Rasch, Alexander
Year of Publication: 
2019
Series/Report no.: 
DICE Discussion Paper 314
Abstract: 
Rules of consumer protection or fair competition can be publicly or privately enforced. We consider the possibility of false advertising by a firm in duopolistic competition where consumers can be distinguished according to whether or not they form rational beliefs about the trustworthiness of advertising claims. We compare private and public law enforcement in the form of the demand for injunctions against false advertising. From a welfare perspective, we show that it can be optimal either to have the private entity (the competitor/a consumer protection agency) or the government agency as plaintiff, where the optimal regime depends on the share of näive consumers and the level of trial costs in a non-trivial way.
Subjects: 
injunction suits
false advertising
law enforcement
naïve consumer
product differentiation
JEL: 
K41
K42
L13
L15
ISBN: 
978-3-86304-599-9
Document Type: 
Working Paper

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