On the Validity of Marginal Analysis for Policy Making

On the Validity of Marginal Analysis for Policy Making
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论边际分析对政策制定的有效性

DOI:
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发表时间:
1982
影响因子:
1.1
通讯作者:
D. Worcester
D. Worcester
中科院分区:
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文献类型:
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作者:
D. Worcester

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Avinash Dixit and Victor Norman's analysis of "Advertising and Welfare" provide an interesting example of the type of analysis I think seriously misleading.1 They, (henceforth D-N) begin with an economy divided into monopolistic and competitive sectors. Although we are not told how the monopoly came into existence, their model is more sophisticated than others because it admits the possibility that advertising might improve consumer welfare. This possibility exists, not by improving information, but by misleading otherwise correctly-informed consumers into purchasing more of the monopolized product than they otherwise would have at the monopoly price. The result is not as efficient as universal competition but it can be better than the initial position.2 Advertising wastes some resources but it offsets the initial