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Manufacturing Doubt

Author

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  • Yann Bramoullé

    () (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique)

  • Caroline Orset

    (ECO-PUB - Economie Publique - AgroParisTech - INRA - Institut National de la Recherche Agronomique)

Abstract

In their persistent fight to affect regulation, firms have developed specific strategies to exploit 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. 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, the industry stops its efforts abruptly. We then study the impact of firms' communication on scientific funding. A populist government may, perversely, 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 halshs-01236111, HAL.
  • Handle: RePEc:hal:wpaper:halshs-01236111
    Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-01236111
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    Cited by:

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    3. 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.

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    More about this item

    Keywords

    populist policies; scientific uncertainty; research funding; indirect lobbying;

    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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