[go: up one dir, main page]
More Web Proxy on the site http://driver.im/
IDEAS home Printed from https://ideas.repec.org/a/cje/issued/v22y1989i2p217-27.html
   My bibliography  Save this article

Expanding the Informativeness of the Price System with Law

Author

Listed:
  • Marcel Boyer
  • Jean-Jacques Laffont
Abstract
The use of false regular prices is a major case of misleading advertisement in what seems to be quite competitive markets. The authors construct a competitive model with rational expectations in which such misleading advertising emerges. They assume that there is competition locally, but that different qualities can exist on different markets. The quality-revealing process is noisy: some high quality firms experience problems and announce a bargain sale. There is a legal penalty, K, to be paid if someone is convicted of misrepresenting the quality of its product. As K increases, the price system becomes "more" informative by increasing the credibility and average quality associated with the signal "bargain sale."

Suggested Citation

  • Marcel Boyer & Jean-Jacques Laffont, 1989. "Expanding the Informativeness of the Price System with Law," Canadian Journal of Economics, Canadian Economics Association, vol. 22(2), pages 217-227, May.
    • Handle: RePEc:cje:issued:v:22:y:1989:i:2:p:217-27
    as

    Download full text from publisher

    File URL: http://links.jstor.org/sici?sici=0008-4085%28198905%2922%3A2%3C217%3AETIOTP%3E2.0.CO%3B2-D
    Download Restriction: only available to JSTOR subscribers
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    More about this item

    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:cje:issued:v:22:y:1989:i:2:p:217-27. See general information about how to correct material in RePEc.

    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.

    We have no bibliographic references for this item. You can help adding them by using 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.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Prof. Werner Antweiler (email available below). General contact details of provider: https://edirc.repec.org/data/ceaaaea.html .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.