Misleading Advertising in Mixed Markets: Consumer-orientation and welfare outcomes

Sharma, Ajay (2019): Misleading Advertising in Mixed Markets: Consumer-orientation and welfare outcomes. Forthcoming in: International Journal of Economics of Business

Abstract

In this paper, we analyse misleading advertising competition between private firms (profit oriented) and consumer-oriented firms (concerned about consumer welfare) in the context of mixed markets. The nature of advertising in this paper is assumed to be non-rival in nature and is beneficial to all the firms in the market. We find that, both private and consumer-oriented firms incur positive expenditure on misleading advertising. Further, the profit of consumer-oriented firms is higher than that of private firms. Moreover, irrespective of whether firms are concerned about consumer welfare or not, the level of misleading advertising is socially excessive.

• Item Type: MPRA Paper
• Language: English
• Keywords: Misleading advertising, Non-rival advertising, Consumer-oriented firm, Mixed markets, Cournot competition
• Subjects: D - Microeconomics > D2 - Production and Organizations > D21 - Firm Behavior: Theory; L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance; L - Industrial Organization > L2 - Firm Objectives, Organization, and Behavior; L - Industrial Organization > L3 - Nonprofit Organizations and Public Enterprise

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