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Manufacturing doubt

Author

Listed:
  • Yann Bramoullé
  • Caroline Orset

Abstract

In their persistent fight against regulation, firms have developed specific strategies to take advantage of scientific uncertainty. They have spent large amounts of money to generate and publicize favorable scientific findings, to discredit and downplay unfavorable ones and to shape the public’s perceptions through large scale communication campaigns. We develop a new model to study the interplay between scientific uncertainty, firms’ communication and public policies. The government is benevolent but populist and maximizes social welfare as perceived by citizens. The industry can provide costly evidence that its activity is not harmful. Citizens incorrectly treat the industry’s information on par with scientific knowledge. We characterize the industry’s optimal communication policy. We find that communication effort is non-monotonous and discontinuous in scientific belief. As scientists become increasingly convinced that the industrial activity is harmful, firms first devote more and more resources to reassure people. When scientists’ beliefs reach a critical threshold, however, overcoming the scientific consensus becomes too costly and the industry stops its efforts abruptly. We then study the impacts of firms’ communication on scientific funding. Perversely, a populist government may want to support research to better allow firms to miscommunicate. Populist policies can entail significant welfare losses. Establishing an independent funding agency always reduces these losses and may lead to under- or over- investment in research with respect to the first-best.

Suggested Citation

  • Yann Bramoullé & Caroline Orset, 2015. "Manufacturing doubt," Working Papers 2015/02, INRA, Economie Publique.
  • Handle: RePEc:apu:wpaper:2015/02
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    Cited by:

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    2. Elise Grieg, 2021. "Public opinion and special interests in American environmental politics," CER-ETH Economics working paper series 21/349, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
    3. Mireille Chiroleu‐Assouline & Thomas P. Lyon, 2020. "Merchants of doubt: Corporate political action when NGO credibility is uncertain," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 29(2), pages 439-461, April.
    4. Julien Jacob & Caroline Orset, 2020. "Innovation, information, lobby and tort law under uncertainty," Working Papers of BETA 2020-25, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
    5. Julien Jacob & Eve-Angéline Lambert & Mathieu Lefebvre & Sarah Van Driessche, 2021. "Information disclosure under liability: an experiment on public bads," Working Papers of BETA 2021-30, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
    6. Daniel Cardona & Jenny De Freitas & Antoni Rubí-Barceló, 2021. "Environmental policy contests: command and control versus taxes," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 28(3), pages 654-684, June.

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    More about this item

    Keywords

    Scientific Uncertainty; Populist Policies; Indirect Lobbying; Research Funding;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • L66 - Industrial Organization - - Industry Studies: Manufacturing - - - Food; Beverages; Cosmetics; Tobacco
    • Q57 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Ecological Economics
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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