There is widespread evidence that some firms use false advertising to overstate the value of their products. Using a … advertising actively influences rational buyers. We analyze the effects of policy under different welfare objectives and establish … a set of demand and parameter conditions where policy optimally permits a positive level of false advertising. Further …

There is widespread evidence that some firms use false advertising to overstate the value of their products. We … advertising actively influences rational buyers, and analyze the effects of policy under different welfare objectives. We … establish precise conditions where policy optimally permits a positive level of false advertising, and show how these conditions …