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Misleading advertising in mixed markets: non-profit orientation and welfare outcomes

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  • Ajay Sharma

Abstract

In this article, 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 article 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.

Suggested Citation

  • Ajay Sharma, 2020. "Misleading advertising in mixed markets: non-profit orientation and welfare outcomes," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 27(2), pages 291-302, May.
    • Handle: RePEc:taf:ijecbs:v:27:y:2020:i:2:p:291-302
    DOI: 10.1080/13571516.2019.1674491
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