Abstract
There has been a large increase in the adoption of tobacco advertising restrictions worldwide over the last two decades. Much of the literature studies their direct effect on cigarette demand. This paper investigates the indirect effect of advertising restrictions by evaluating the effect of the policies on the degree of concentration in the tobacco market. By using the variation between countries in timing of adoption of advertising restrictions, I estimate difference-in-difference models to examine the effect of an advertising ban on market-concentration, as measured by HHI. I find that advertising bans lead to an increase in market-concentration: HHI increased by 0.06 points for countries that adopted a ban between 2001 and 2017 conditional on trade and socio-economic characteristics, representing a 13% increase with respect to the mean (0.44). The effect is higher in developing countries (0.08 points increase). Further, I find that ‘comprehensive’ restrictions have a stronger impact on concentration, and ‘limited’ restrictions have little or no impact. These findings point to an important trade-off for policymakers: on one hand, advertising restrictions are likely to reduce consumption of cigarettes; on the other hand, due to an increase in market-concentration, they may be giving more power to tobacco companies.
Highlights
Tobacco use represents the largest preventable cause of premature death and disease in the world, contributing to over 6 million deaths per year
It is well documented that advertising increases tobacco use; it encourages youth to experiment with tobacco products, reduces current users’ motivation to quit, and encourages former users to resume tobacco use [1]
I examine the relationship between tobacco advertising restrictions and market-concentration in the cigarette industry using a cross-country design: a panel dataset for 64 countries covering advertising restrictions for 7 direct media channels, over 17 years, from 2001 to 2017
Summary
Tobacco use represents the largest preventable cause of premature death and disease in the world, contributing to over 6 million deaths per year. It is well documented that advertising increases tobacco use; it encourages youth to experiment with tobacco products, reduces current users’ motivation to quit, and encourages former users to resume tobacco use [1]. This link between advertising and smoking is a key concern for policy makers and has led to an extraordinary rise in advertising restrictions across the world. I examine the relationship between tobacco advertising restrictions and market-concentration in the cigarette industry using a cross-country design: a panel dataset for 64 countries covering advertising restrictions for 7 direct media channels, over 17 years, from 2001 to 2017. Employing the same identification strategy, I examine the effect of advertising restrictions on consumption
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