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Rubin, Paul H. --- "Regulation of Information and Advertising" [2012] ELECD 435; in Van den Bergh, J. Roger; Pacces, M. Alessio (eds), "Regulation and Economics" (Edward Elgar Publishing, 2012)

Book Title: Regulation and Economics

Editor(s): Van den Bergh, J. Roger; Pacces, M. Alessio

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781847203434

Section: Chapter 3

Section Title: Regulation of Information and Advertising

Author(s): Rubin, Paul H.

Number of pages: 23

Extract:

3 Regulation of information and advertising*
Paul H. Rubin



1. INTRODUCTION

"Deception" is the manipulation of information to gain some advantage. While
people engage in deception in many dimensions for many types of advantage,
here I will confine myself to commercial deception through advertising. To
understand the economics of deception, I begin with the economics of infor-
mation. There have been several major analyses of the implications of the
economics of information for the regulation of deceptive advertising
(Schwartz and Wilde, 1979; Jordan and Rubin, 1979; Beales et al., 1984;
Rubin, 1991; Calfee, 1997). The literature has derived four major policy
conclusions. First, truthful information regarding price should not be restricted
by regulatory authorities. Second, deception is most likely and most harmful
for "credence" goods, and regulation is most useful (if it is useful at all) for
these goods. Third, truthful information should never be restricted. Fourth,
regulation of advertising is best done by authorities that specialize in advertis-
ing, rather than by agencies with another mission. A fifth, more tentative
conclusion, is that regulation should limit itself to statements that are actually
false, and ignore those that are "misleading" or "deceptive."
The focus of this chapter will be primarily US law though most concepts
translate into an international context. I begin with a discussion of the First
Amendment issues in regulating advertising. In the following two sections, I
discuss advertising of prices and regulation and types of goods. The next
section (5) examines regulation of true information about characteristics ...