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Critically examine the view that advertising should be restricted not least because it is wasteful and distorts markets

      

Critically examine the view that advertising should be restricted not least because it is wasteful and distorts markets

  

Answers


queen
Advertising refers to the process of drawing attention to a product, brand or company. The aim of advertising is to inform consumers about a product and to persuade them to purchase the product. Advertising takes place across a wide range of media with the Advertising Association estimating that almost £20 bn was spent on advertising in the UK in 2009.
Critics of advertising argue that it should be restricted because:
• firms use advertising to manipulate people’s tastes. Most advertising is psychological rather than informational – it is designed to play on psychological weaknesses to create desires that would otherwise not exist and therefore should be restricted. This is the argument used to justify the ban on cigarette advertising and the calls for restrictions on the advertising of alcohol and junk food
• it impedes competition since it attempts to differentiate products and create brand loyalty. This reduces PED and increases YED and allows the firm to charge a price which is greater than MC, therefore reducing allocative efficiency
• firms can use saturation advertising as a barrier to entry which strengthens monopoly power and therefore results in a loss of productive and allocative efficiency
queen babito answered the question on July 9, 2018 at 07:31


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