Direct to Consumer Advertising of Pharmaceutical Drugs: Information and Persuasion

Talia Bar and Dean R. Lillard

No 19794, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We formally model direct to consumer advertising (DTCA) of prescription drugs and examine factors that determine a pharmaceutical firm's 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.

JEL-codes: I18 L15 L65 M37 (search for similar items in EconPapers)
Date: 2014-01
New Economics Papers: this item is included in nep-com, nep-cta, nep-hea and nep-mkt
Note: EH IO
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Citations: View citations in EconPapers (1)

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