Side Effects of Competition: the Role of Advertising and Promotion in Pharmaceutical Markets / Guy David, Sara Markowitz.

Format:

Book

Author/Creator:

David, Guy.

Contributor:

National Bureau of Economic Research.

Markowitz, Sara.

Series:

Working Paper Series (National Bureau of Economic Research) no. w17162.

NBER working paper series no. w17162

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Side Effects of Competition

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2011.

Summary:

The extent of pharmaceutical advertising and promotion can be characterized by a balancing act between profitable demand expansions and potentially unfavorable subsequent regulatory actions. However, this balance also depends on the nature of competition (e.g. monopoly versus oligopoly). In this paper we model the firm's behavior under different competitive scenarios and test the model's predictions using a novel combination of sales, promotion, advertising, and adverse event reports data. We focus on the market for erectile dysfunction drugs as the basis for estimation. This market is ideal for analysis as it is characterized by an abrupt shift in structure, all drugs are branded, the drugs are associated with adverse health events, and have extensive advertising and promotion. We find that advertising and promotion expenditures increase own market share but also increase the share of adverse drug reactions. Competitors' spending decreases market share, while also having an influence on adverse drug reactions.

Notes:

Print version record

June 2011.