How limiting deceptive practices harms consumers
There are two competing sellers of an experience good, one offers high quality, one low. The low-quality seller can engage in deceptive advertising, potentially fooling a buyer into thinking the product is better than it is. Although deceptive advertising might seem to harm the buyer, we show that h...
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| Veröffentlicht in: | The Rand journal of economics 2015-09, Vol.46 (3), p.611-624 |
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| Hauptverfasser: | , , |
| Format: | Artikel |
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| container_end_page | 624 |
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| container_issue | 3 |
| container_start_page | 611 |
| container_title | The Rand journal of economics |
| container_volume | 46 |
| creator | Piccolo, Salvatore Tedeschi, Piero Ursino, Giovanni |
| description | There are two competing sellers of an experience good, one offers high quality, one low. The low-quality seller can engage in deceptive advertising, potentially fooling a buyer into thinking the product is better than it is. Although deceptive advertising might seem to harm the buyer, we show that he could be better off when the low-quality seller can engage in deceptive advertising than not. We characterize the optimal deterrence rule that a regulatory agency seeking to punish deceptive practices should adopt. We show that greater protection against deceptive practices does not necessarily improve the buyer welfare. |
| doi_str_mv | 10.1111/1756-2171.12099 |
| format | Article |
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| fulltext | fulltext |
| identifier | ISSN: 0741-6261 |
| ispartof | The Rand journal of economics, 2015-09, Vol.46 (3), p.611-624 |
| issn | 0741-6261 1756-2171 |
| language | eng |
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| source | EBSCOhost Business Source Complete; Access via Wiley Online Library; JSTOR Archive Collection A-Z Listing |
| subjects | Advertising Buyers surplus Consumer advertising Consumer information Consumer prices Consumers Coordinate systems Deceit Deceptive advertising Deterrence Economic analysis Equilibrium prices False advertising Goods Monopoly Sales management Studies Welfare |
| title | How limiting deceptive practices harms consumers |
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