Re-interpreting the effect of an advertising ban on cigarette smoking
Because of the high social cost of cigarette smoking, many countries have imposed advertising restrictions to reduce cigarette consumption. Yet previous research suggests that such advertising constraints have been ineffective in combating smoking. We show that this conclusion is incorrect because it ignores the fact that advertising restrictions affect the extent of competition as well as demand. An advertising ban reduces competition which raises price and decreases consumption.
Given the high social cost associated with cigarette smoking, many countries have imposed restrictions on advertising in an effort to reduce cigarette consumption. In the US, for example, two important cigarette advertising restrictions have been imposed. First, the Fairness Doctrine Act, effective from 1968 through 1970, required that one anti-smoking advertisement be aired for every four pro-smoking advertisements on television and radio. Second, in 1971 the US Broadcast Advertising Ban was imposed, eliminating all cigarette advertising from television and radio. More stringent restrictions are currently being discussed. For instance, in his State of the Union speech on 4 February 1997, President Clinton recommended a ban on cigarette advertisements targeted at children. In addition, the US tobacco industry and the government are currently negotiating a settlement package that includes new restrictions on cigarette advertising (for example, see Cooper, 1997 and Drinkard, 1997).