Author

Dubra, Juan ; Di Tella, Rafael

Editor

Universidad de Montevideo, Facultad de Ciencias Empresariales y Economía, Departamento de Economía

Date

2012

Extensión

35 p.

Abstract

We study a model where agents experience anger when they see a firm that hasdisplayed insufficient concern for their clients' welfare (altruism) makes high profits.Regulation can increase welfare, for example, through fines (even with no changes inprices). Besides the standard channel (efficiency), regulation affects welfare through 2 channels: (i) regulation calms down existing consumers because a reduction in the proffits of an "unkind" firm increases total welfare by reducing consumer anger; and(ii) individuals who were out of the market when they were angry in the unregulated market, decide to purchase once the firm is regulated.

Palabras claves

Public relations Commercial legitimacy Populism

Tipo

Documento de trabajo

Derechos

Abierto

Versión

Publicada

En

Documentos de trabajo del Departamento de Economía; UM_CEE_2012_03

Collections

• Documentos de trabajo [66]