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Tobacco Advertising: Economic Theory and International Evidence

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Author Info
Henry Saffer
Frank Chaloupka

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Abstract

Tobacco advertising is a public health issue if these activities increase smoking. Although public health advocates assert that tobacco advertising does increase smoking, there is significant empirical literature that finds little or no effect of tobacco advertising on smoking. In this paper, these prior studies are examined more closely with several important insights emerging from this analysis. This paper also provides new empirical evidence on the effect of tobacco advertising. The primary conclusion of this research is that a comprehensive set of tobacco advertising bans can reduce tobacco consumption and that a limited set of tobacco advertising bans will have little of no effect. The regression results indicate that a comprehensive set of tobacco advertising bans can reduce consumption by 6.3 percent. The regression results also indicate that the new European Commission directive tobacco advertising in the EC countries, will reduce tobacco consumption by about 6.9 percent on average in the EC. The regression results also indicate that the ban on outdoor advertising included in the US tobacco industry state level settlement will probably not result in much change in advertising expenditures nor in tobacco use. Under the settlement industry would also contribute $1.5 billion over five years for public education on tobacco use. This counteradvertising could reduce tobacco use by about two percent.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 6958.

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Date of creation: Feb 1999
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Handle: RePEc:nbr:nberwo:6958

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  1. Duffy, Martyn, 1995. "Advertising in demand systems for alcoholic drinks and tobacco: A comparative study," Journal of Policy Modeling, Elsevier, vol. 17(6), pages 557-577, December. [Downloadable!] (restricted)
  2. Becker, Gary S & Murphy, Kevin M, 1993. "A Simple Theory of Advertising as a Good or Bad," The Quarterly Journal of Economics, MIT Press, vol. 108(4), pages 941-64, November. [Downloadable!] (restricted)
  3. Seldon, Barry J & Doroodian, Khosrow, 1989. "A Simultaneous Model of Cigarette Advertising: Effects on Demand and Industry Response to Public Policy," The Review of Economics and Statistics, MIT Press, vol. 71(4), pages 673-77, November. [Downloadable!] (restricted)
  4. Roberts, M.J. & Samuelson, L., 1988. "An Empirical Analysis Of Dynamic, Non-Price Competition In An Oligopolistic Industry," Papers 3-88-14, Pennsylvania State - Department of Economics.
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  5. Schneider, Lynne & Klein, Benjamin & Murphy, Kevin M, 1981. "Governmental Regulation of Cigarette Health Information," Journal of Law & Economics, University of Chicago Press, vol. 24(3), pages 575-612, December.
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  6. Valdes, Benigno, 1993. "Cigarette Consumption in Spain: Empirical Evidence and Implications for Public Health Policy," Applied Economics, Taylor and Francis Journals, vol. 25(2), pages 149-56, February.
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