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The effects of advertising--lessons from optometry
The Journal of Human Resources
|January 1, 1978
Summary
Bans on optometric and optician price advertising significantly increase eye exam costs by 16%. Both advertising restrictions must be in place for this price increase to occur, impacting consumer search for lower prices.
Area of Science:
- Health Economics
- Ophthalmology
- Consumer Behavior
Background:
- Advertising serves as a crucial information channel for consumers seeking lower prices.
- High-cost, low-volume sellers may be disadvantaged by advertising and thus support bans.
Purpose of the Study:
- To investigate the impact of advertising bans on the pricing of optometric examinations.
- To determine the specific effects of optometric and optician price advertising restrictions.
Main Methods:
- Empirical analysis comparing prices in states with and without advertising bans.
- Controlled comparison holding examination length, procedures, and office equipment constant.
Main Results:
- Prices for optometric examinations are 16% higher in states with bans on optometric and optician price advertising.
- A significant price increase requires the interaction of both types of advertising bans.
Conclusions:
- Advertising bans on optometric and optician services lead to higher examination prices.
- The presence of both optometric and optician advertising bans is necessary to significantly elevate eye examination costs.