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The Economics of Information, Deep Capture, and the Obesity Debate

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  • Trenton G. Smith
  • Attila Tasnádi

Abstract

The economic theory of regulatory capture predicts that industry groups will attempt to influence their regulators (for example, by lobbying for rules that exclude competition). It has been suggested that the same logic applies to any powerful institution with the ability to affect industry profits. When the aim of industry is to alter the public's perception of its product (for example, by disseminating favorable messages to the news media or via an advertising campaign, or by funding industry-friendly scientific research), the end result has been dubbed deep capture. We develop a formal model of deep capture, in which consumers have imperfect information about product quality, and a dominant producer is able to increase his profits by altering the parameters of the consumer's search problem. We demonstrate the empirical relevance of the phenomenon with a discussion of the food industry response to the obesity epidemic.

Suggested Citation

  • Trenton G. Smith & Attila Tasnádi, 2014. "The Economics of Information, Deep Capture, and the Obesity Debate," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 96(2), pages 533-541.
    • Handle: RePEc:oup:ajagec:v:96:y:2014:i:2:p:533-541.
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    File URL: http://hdl.handle.net/10.1093/ajae/aat113
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    Cited by:

    1. Karl Aiginger, 2016. "New Dynamics for Europe: Reaping the Benefits of Socio-ecological Transition – Part I: Synthesis. WWWforEurope Deliverable No. 11," WIFO Studies, WIFO, number 58791.
    2. Kolodinsky, Jane & Reynolds, Travis & Baker, Daniel & Watts, Richard, 2015. "Regulatory Capture and Support for and Opposition to Controversial Food System Policy Issues: An Exploratory Analysis," 143rd Joint EAAE/AAEA Seminar, March 25-27, 2015, Naples, Italy 202700, European Association of Agricultural Economists.

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