3 ms·

advertising rarely causes anyone harm.

• cma 16y ago
  Two companies (let's say Coke and Pepsi) are engaged in an advertising war. Coke hires a graphic designer to draw a cool logo. Pepsi has to fire back and do the same. In the end both of their brand statures remain them same, and two artists who would rather have spent their time working on something else had their time wasted, due to a particular incentive structure. Everyone acted in their own interest, and individually had a positive ROI. Yet collectively, the ROI was negative. Coke's action had a negative externality on Pepsi; Pepsi fired back with an action that had a negative externality on Coke.