AND THE CONSUMER
Regulation of false and unfair advertising was authorized at the federal level in 1914 when Congress enacted the Federal Trade Commission Act, declaring unlawful "unfair methods of competition."1 Before the 1960s, government regulation of national advertising was sporadic and weak, frequently instigated by competitive (as opposed to consumer) interests, and often based upon arbitrary and literalistic standards of accuracy.2
The last decade has witnessed sharply increased government efforts at regulating advertising and significant departures from earlier approaches--more cases, new theories of truth and relevance, and imposition of more drastic remedies against violators. Much of this augmented regulatory activity reflects pressures generated by the "consumer movement," with many of the new cases, rules, and programs designed to require or encourage dissemination to consumers of accurate and relevant product information they can use to make informed choices among competing brands.
I believe a solid case in economics and law can be made in favor of government regulation of truth-in-advertising. Of course, ill-conceived regulation will suppress or diminish useful information in the market- place, and generate unjustifiable costs. New regulatory approaches, and specific programs and cases, will be justifiable only if linked securely to an appreciation of the legitimate role of advertising in the free market process. I believe most recent advertising regulation efforts meet this test; many earlier federal efforts at regulation were wrongheaded and counterproductive precisely because they did not.
In succeeding sections, I will discuss (1) justifications for government regulation of advertising, (2) arguments that there is no proper____________________