The effects of advertising--lessons from optometry.

We examine the effect of advertising bans on the price of optometric examinations. Advertising is viewed as an information medium which enables consumers to search for lower prices, to the relative disadvantage of high-cost, low-volume sellers. Self-interest leads these sellers to support bans on advertising. An empirical section shows that price is 16 percent higher in states that ban optometric and optician price advertising, when examination length, procedures, and office equipment are held constant. The two advertising bans work by interaction--both must be present to raise significantly the price of eye examinations.