Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/267794 
Year of Publication: 
2022
Series/Report no.: 
ISER Discussion Paper No. 1182
Publisher: 
Osaka University, Institute of Social and Economic Research (ISER), Osaka
Abstract: 
This paper examines the optimal content regulation of DTCA by comparing two forms of DTCA-product-specific and category-specific-and identifies a key tradeoff which underlies this policy debate. Our analysis suggests that the optimal form of DTCA depends crucially on the cost effectiveness of DTCA and the market-size distortion induced by DTCA. When the cost of advertisement is high, there often exists a Pareto-improving policy choice: category-specific DTCA is preferred when the marketsize distortion is more severe while produce DTCA is preferred when it is less so. As the cost decreases, however, a conflict emerges between pharmaceutical firms and patients: firms are worse off under product-specific DTCA while patients are better off. We also find that the physician's reluctance to persuade misinformed patients can actually alleviate the market-size distortion and hence be welfare-enhancing.
Subjects: 
category-specific DTCA
product-specific DTCA
advertisement regulation
prescriptiondecision
pharmaceutical market
JEL: 
M37
I11
I18
Document Type: 
Working Paper

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