Review of Economic Studies Vol. 86 No. 2 2019
Ask Your Doctor? Direct-to-Consumer Advertising of Pharmaceuticals
Abstract
We measure the impact of direct-to-consumer television advertising (DTCA) by drug manufacturers. Our identification strategy exploits shocks to local advertising markets generated by the political advertising cycle and a regulatory intervention affecting a single product. We find evidence of significant business stealing effects among branded, advertised drugs. In addition, we show positive spillovers from drug advertisements to non-advertised competitors in the same class. We decompose the effect and show it is primarily due to new customers. Finally, we provide evidence that DTCA is cost-effective from a societal standpoint in our setting.
- DOI
- 10.1093/restud/rdy001
- Volume
- 86
- Issue
- 2
- Pages
- 836-881
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref