Anger and regulation
Resumen:
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.
| 2012 | |
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Public relations Commercial legitimacy Populism |
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| Inglés | |
| Universidad de Montevideo | |
| REDUM | |
| https://hdl.handle.net/20.500.12806/1324 | |
| Acceso abierto | |
| Attribution-NonCommercial-NoDerivatives 4.0 Internacional |
| Sumario: | 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. |
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