Advertising and Entry: The Case of Physician Services

John Rizzo and Richard Zeckhauser

Journal of Political Economy, 1990, vol. 98, issue 3, 476-500

Abstract: This paper examines the entry implications of physician advertising. Evidence suggests that advertising inhibited entry into this market. Nevertheless, experienced physicians (incumbents), to whom advertising would offer the greatest financial benefit, in fact advertise less--a paradox that may be explained by nonfinancial concerns, such as unwillingness to break well-internalized professional norms against advertising. Physician advertising has risen sharply in recent years and it appears that this trend will continue. If incumbents increasingly resort to advertising, there could be substantial redistribution of income from less-well-established physicians to better-established ones. Copyright 1990 by University of Chicago Press.

Date: 1990
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