Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/230464
Authors: 
Ishida, Junichiro
Takahara, Tsuyoshi
Year of Publication: 
2019
Series/Report no.: 
ISER Discussion Paper No. 1058
Abstract: 
This paper analyzes the optimal content regulation of direct-to-consumer advertisement (DTCA) in a pharmaceutical market, with particular focus on the distinction between product and enlightenment advertisement. Firms are allowed to freely promote their own specific products under product DTCA, whereas they can only advertise the presence of a disease and its typical subjective symptoms under enlightenment DTCA. The content regulation changes the nature of market competition and the incentive to invest in advertisement, thereby yielding substantial welfare and policy implications. The overall welfare impact of the content regulation is ambiguous and depends, among other things, on the cost effectiveness of advertisement and the market-size distortion induced by product DTCA. We also analyze the effect of free market pricing and argue that a less stringent advertisement regulation, i.e., product DTCA, is often complementary to a less stringent price regulation.
Subjects: 
DTCA
Advertisement content regulation
Prescription decision
JEL: 
M37
I11
I18
Document Type: 
Working Paper

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