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

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  • 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
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Misleading advertising; Non-rival advertising; Consumer-oriented firm; Mixed markets; Cournot competition;
    All these keywords.

    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

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