2014
DOI: 10.1016/j.infoecopol.2014.04.004
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Misleading advertising and minimum quality standards

Abstract: This paper examines the relationship between misinformation about product quality and quality standards, such as minimum quality standards and certification criteria, when products are vertically differentiated in their health/safety aspects. We investigate the welfare effect of regulating misinformation and strengthening MQSs. We find that when the amount of misinformation on both low-and highquality products is small, regulating misinformation on low-quality products reduces welfare, although the strictness … Show more

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Cited by 9 publications
(5 citation statements)
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“…Given the appeal of gossip and scandal, as illustrated by media outlets such as the National Enquirer or Access Hollywood on TV, advertisers can thus profit off sensationalized and potentially misinformed claims (e.g., Han et al, 2022). Another fundamental concern is that advertisements themselves contain misinformation (Baker, 2018;Braun & Loftus, 1998;Glaeser & Ujhelyi, 2010;Hattori & Higashida, 2014;Rao, 2022;Zeng et al, 2020Zeng et al, , 2021.…”
Section: Societal-level Effects Of Misinformationmentioning
confidence: 99%
“…Given the appeal of gossip and scandal, as illustrated by media outlets such as the National Enquirer or Access Hollywood on TV, advertisers can thus profit off sensationalized and potentially misinformed claims (e.g., Han et al, 2022). Another fundamental concern is that advertisements themselves contain misinformation (Baker, 2018;Braun & Loftus, 1998;Glaeser & Ujhelyi, 2010;Hattori & Higashida, 2014;Rao, 2022;Zeng et al, 2020Zeng et al, , 2021.…”
Section: Societal-level Effects Of Misinformationmentioning
confidence: 99%
“…More recently, Glaeser and Ujhelyi (2010) analyze various responses to regulating misinformation (counter-advertising, taxation and product regulation). The authors assume that consumers naïvely believe all advertising claims (see also Hattori andHigashida 2012 and2014 for duopoly markets with either horizontally or vertically differentiated goods). Their results suggest that a certain amount of misinformation about product quality may improve social welfare under imperfect competition.…”
Section: Literature Reviewmentioning
confidence: 99%
“…two respects: (i) while considering a market with constant overall demand, we allow for a variable share of naïve consumers and, most importantly, (ii) we focus on law enforcement against misleading claims. As in our model, Nagler (1993) and Hattori and Higashida (2015) relax the assumption of only naïve consumers. Nagler (1993) allows consumers to learn, at some cost, about the trustworthiness of advertising and establishes that firms may still use misleading advertising.…”
Section: Literature Reviewmentioning
confidence: 99%
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“…On the one hand, it is unquestionably connected with the increasing popularity of the concept of quality and the willingness to purchase products and services of a desired level. On the other hand, however, this concept is very frequently overused [1,2] and is used by sellers excessively or simply dishonestly, when it does not match high quality in reality [3].…”
Section: Introductionmentioning
confidence: 99%