IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/96189.html
   My bibliography  Save this paper

Misleading Advertising in Mixed Markets: Consumer-orientation and welfare outcomes

Author

Listed:
  • Sharma, Ajay

Abstract

In this paper, 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 paper 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

  • Sharma, Ajay, 2019. "Misleading Advertising in Mixed Markets: Consumer-orientation and welfare outcomes," MPRA Paper 96189, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:96189
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/96189/1/MPRA_paper_96189.pdf
    File Function: original version
    Download Restriction: no

    References listed on IDEAS

    as
    1. John Crespi & Stéphan Marette, 2002. "Generic Advertising and Product Differentiation," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 84(3), pages 691-701.
    2. Keisuke Hattori & Keisaku Higashida, 2012. "Misleading advertising in duopoly," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 45(3), pages 1154-1187, August.
    3. Avinash Dixit & Victor Norman, 1978. "Advertising and Welfare," Bell Journal of Economics, The RAND Corporation, vol. 9(1), pages 1-17, Spring.
    4. Glaeser, Edward L. & Ujhelyi, Gergely, 2010. "Regulating misinformation," Journal of Public Economics, Elsevier, vol. 94(3-4), pages 247-257, April.
    5. Goering, Gregory E., 2008. "Welfare impacts of a non-profit firm in mixed commercial markets," Economic Systems, Elsevier, vol. 32(4), pages 326-334, December.
    6. Jiancai Pi & Pengqing Zhang & Xuyang Chen, 2018. "An Investigation of Stackelberg Mixed Oligopoly with Advertising Competition," Manchester School, University of Manchester, vol. 86(4), pages 468-487, July.
    7. Michael Kopel & Marco Marini, 2014. "Strategic delegation in consumer cooperatives under mixed oligopoly," Journal of Economics, Springer, vol. 113(3), pages 275-296, November.
    8. Michael Kopel & Marco Marini, 2014. "Erratum to: Strategic delegation in consumer cooperatives under mixed oligopoly," Journal of Economics, Springer, vol. 113(3), pages 297-297, November.
    9. Ajay Sharma, 2018. "A note on Stackelberg equilibrium in duopoly: Strategic use of corporate social responsibility," Economics Bulletin, AccessEcon, vol. 38(4), pages 1720-1726.
    10. Nirvikar Singh & Xavier Vives, 1984. "Price and Quantity Competition in a Differentiated Duopoly," RAND Journal of Economics, The RAND Corporation, vol. 15(4), pages 546-554, Winter.
    11. Matsumura, Toshihiro & Sunada, Takeaki, 2013. "Advertising competition in a mixed oligopoly," Economics Letters, Elsevier, vol. 119(2), pages 183-185.
    12. Freimuth, V.S. & Hammond, S.L. & Stein, J.A., 1988. "Health advertising: Prevention for profit," American Journal of Public Health, American Public Health Association, vol. 78(5), pages 557-561.
    13. Basu, Kaushik, 1995. "Stackelberg equilibrium in oligopoly: An explanation based on managerial incentives," Economics Letters, Elsevier, vol. 49(4), pages 459-464, October.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Misleading advertising; Non-rival advertising; Consumer-oriented firm; Mixed markets; Cournot competition;

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
    • L3 - Industrial Organization - - Nonprofit Organizations and Public Enterprise

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:96189. 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: (Joachim Winter). General contact details of provider: http://edirc.repec.org/data/vfmunde.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.