Direct to Consumer Advertising of Pharmaceutical Drugs: Information and Persuasion
AbstractWe formally model direct to consumer advertising (DTCA) of prescription drugs and examine factors that determine a pharmaceutical firms DTCA strategy. We highlight how the profitability of DTCA varies with the characteristics of the condition that the advertised drug treats, the incidence of the condition, and the signal value of symptoms, and risk factors. We account for the potential information benefits from DTCA as well as its potential to persuade consumers. From a welfare perspective there can be too much or too little private investment in advertising. Welfare is more likely to increase when the population is uninsured.
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Date of creation: Jan 2014
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Find related papers by JEL classification:
- I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
- L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
- L65 - Industrial Organization - - Industry Studies: Manufacturing - - - Chemicals; Rubber; Drugs; Biotechnology
- M37 - Business Administration and Business Economics; Marketing; Accounting - - Marketing and Advertising - - - Advertising
This paper has been announced in the following NEP Reports:
- NEP-ALL-2014-01-17 (All new papers)
- NEP-COM-2014-01-17 (Industrial Competition)
- NEP-CTA-2014-01-17 (Contract Theory & Applications)
- NEP-HEA-2014-01-17 (Health Economics)
- NEP-MKT-2014-01-17 (Marketing)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Kurt R. Brekke & Michael Kuhn, 2005.
"Direct to Consumer Advertising in Pharmaceutical Markets,"
CESifo Working Paper Series
1493, CESifo Group Munich.
- Brekke, Kurt R. & Kuhn, Michael, 2006. "Direct to consumer advertising in pharmaceutical markets," Journal of Health Economics, Elsevier, Elsevier, vol. 25(1), pages 102-130, January.
- Brekke, Kurt R. & Kuhn, Michael, 2003. "Direct-to-Consumer Advertising in Pharmaceutical Markets," Working Papers in Economics, University of Bergen, Department of Economics 05/03, University of Bergen, Department of Economics.
- Kurt R Brekke & Michael Kuhn, . "Direct-to-Consumer Advertising in Pharmaceutical Markets," Discussion Papers, Department of Economics, University of York 03/11, Department of Economics, University of York.
- Rosemary Avery & Donald Kenkel & Dean R. Lillard & Alan Mathios, 2006. "Private Profits and Public Health: Does Advertising Smoking Cessation Products Encourage Smokers to Quit?," NBER Working Papers 11938, National Bureau of Economic Research, Inc.
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