When Government Misleads US: Sending Misinformation as Protectionist Devices
In this paper, we examine the incentive of the home government to mislead home consumers by sending misinformation. We nd that positive misinformation on home products and negative misinformation on foreign products always increases the pro t of the home rm, while when the marginal costs of home and foreign rms are the same, a small amount of positive misinformation decreases the consumer surplus. Moreover, when the home government maximizes home welfare, it chooses to send positive misinformation on the home product and negative misinformation on the foreign product. The stronger is the competition faced by the home rm, the greater is the amount of negative misinformation on the foreign product. By contrast, the optimal amount of misinformation on each product used to maximize world welfare is positive. We also demonstrate that trade liberalization can increases the incentive of the home government to send misinformation.
|Date of creation:||Aug 2011|
|Date of revision:||Aug 2011|
|Contact details of provider:|| Postal: |
Web page: http://www-econ.kwansei.ac.jp/~econ/index_e.html
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Avinash Dixit & Victor Norman, 1978. "Advertising and Welfare," Bell Journal of Economics, The RAND Corporation, vol. 9(1), pages 1-17, Spring.
- Keisuke Hattori & Keisaku Higashida, 2011.
"Misleading Advertising in Duopoly,"
Discussion Paper Series
69, School of Economics, Kwansei Gakuin University, revised Mar 2011.
- Qiu, Larry D, 1995. "Strategic Trade Policy under Uncertainty," Review of International Economics, Wiley Blackwell, vol. 3(1), pages 75-85, February.
- Glaeser, Edward L. & Ujhelyi, Gergely, 2010.
Journal of Public Economics,
Elsevier, vol. 94(3-4), pages 247-257, April.
- Taiji Furusawa & Keisaku Higashida & Jota Ishikawa, 2004. "Tariffs versus quotas in the presence of imperfect competition and cross-border externalities," Canadian Journal of Economics, Canadian Economics Association, vol. 37(2), pages 445-458, May.
- Qui, Larry D., 1994. "Optimal strategic trade policy under asymmetric information," Journal of International Economics, Elsevier, vol. 36(3-4), pages 333-354, May.
- Melkonian, Tigran A. & Lapan, Harvey E., 2005.
"Tariffs, Quotas and Forward Contracts Under Asymmetric Information,"
Staff General Research Papers
10288, Iowa State University, Department of Economics.
- Tigran Melkonyan & Harvey Lapan, 2005. "Tariffs, Quotas, and Forward Contracts under Asymmetric Information," Review of International Economics, Wiley Blackwell, vol. 13(2), pages 311-329, 05.
When requesting a correction, please mention this item's handle: RePEc:kgu:wpaper:75. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Toshihiro Okada)
If references are entirely missing, you can add them using this form.