English, Article, Journal or magazine article edition: Advertising in Specialized Markets: Example from the US Pharmaceutical Industry Amrita Bhattacharyya

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Physical Description
  • preprint
Language
  • English

Edition details

Title
  • Advertising in Specialized Markets: Example from the US Pharmaceutical Industry
Author
  • Amrita Bhattacharyya
Physical Description
  • preprint
Notes
  • This paper studies the usefulness of advertising to both consumers and experts in specialized markets like the prescription drugs, travel and real-estate markets where the consumers' purchasing decisions are influenced by the experts (e.g., doctors, travel agents and real-estate agents). Inspired by the features of the prescription drugs market the study shows that direct-to-consumer-advertising (DTCA) does not substitute for advertising directed to physicians even when physician-advertising is only persuasive in nature. Furthermore, the paper analyzes possible advertising equilibriums in a two-firm setting and finds that it is possible to have a sub-game perfect, non-symmetric Nash Equilibrium in which only one firm advertises to the consumers and the other firm becomes a free-rider when, (i) the number of patients who are aware of treatment is very low, and (ii) there are very few patients who insist on a particular drug. Otherwise, for familiar diseases a non-advertising equilibrium is most likely. Finally, consumer advertising can have welfare improving implications depending on the disease types and patient characteristics.
  • advertising, DTCA, prescription, expert, Nash equilibrium
  • RePEc:boc:bocoec:610
Language
  • English
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