Tuesday, May 24, 2005

Perfect Competition Indicator

Ranchers required to pay for government beef ads
WASHINGTON - The government can make cattle ranchers pay for ads proclaiming "Beef: It's what's for dinner," the Supreme Court ruled Monday. Some ranchers object to paying for the ad campaigns because they don't like the generic message that all beef, American or foreign, is good. But the court ruled in a 6-3 decision that the beef program amounts to government speech that is shielded from First Amendment challenge.

One indicator of perfect competition is advertising. Firms in perfect competition don't advertise because they would bear the entire cost but reap little of the benefit. The exception is when the government or other trade group does the advertising for the industry.

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