CREDIBLE INFORMATION? THE IMPACT OF THE FTC'S ADVERTISING SUBSTANTIATION PROGRAM.

摘要

This dissertation analyzes the economic impact of the advertising substantiation requirements implemented by the FTC in 1970. This law is directed at verifiable claims and is intended to increase the credibility and informativeness of the information contained in advertising.;That such a potential exists does not imply it will be obtained, or even that the regulators will attempt to achieve it. Evidence from the capital market, and from actual performance of the advertising agency industry is presented as a test of the Stigler-Peltzman wealth-transfer theory of regulation. The data fail to provide support for this hypothesis as applied to the Advertising Substantiation Program.;For the substantiation rule to be effective, deterrence from making false claims must be achieved. Evidence on the behavior of advertising expenditures for a wide variety of products and market shares of aspirin firms is consistent with effective deterrence by substantiation requirements.;Implications of an hypothesized increase in information credibility are developed and tested. Evidence from advertising intensities across industries and within markets is analyzed. The choice of advertising media is also examined. These tests are consistent with an increase in the credibility of information in advertising. An analysis of differential wealth effects in advertising media confirms the earlier findings.;The potential for such a rule to have its intended effect on information credibility is analyzed. Despite the presence of private monitoring of advertising, difficulties exist in fully appropriating the gains from producing information credibility. Hence, coercive monitoring and control of advertising claims has at least the potential to increase the credibility of advertising information.;The evidence presented in the dissertation is generally consistent with effective implementation of the substantiation requirements by the FTC. No evidence is presented on the net benefits of substantiation enforcement. While the data indicate that the intended effect of the regulation was achieved, whether the benefits exceed the costs is a matter requiring further attention.