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Profitability, Advertising Intensity and Concentration Ratio in Indonesian Cigarette Industry (2000 -2013)

Author

Listed:
  • Yulia Saftiana

    (Lecturer, Sriwijaya University, Indonesia)

  • Benadette Robiani

    (Lecturer, Sriwijaya University, Indonesia)

  • Syamsurijal A.K

    (Lecturer, Sriwijaya University, Indonesia)

  • Suhel

    (Lecturer, Sriwijaya University, Indonesia)

Abstract

This study aimed to invest the relationship of structure, behavior and performance on cigarette industry in Indonesia. The variable used in this research is concentration ratio that used CR4 to measure industry structure, advertising intensity of four companies that included in CR4 to measure promotion behavior, Price Cost Margin (PCM) and profitability of four companies (ROS) included in CR4 to measure industry performance.Descriptive analysis between Price Cost Margin (PCM) and concentration of cigarette industry shows the direction of inconsistent relationship but for 23 years the direction of change is more positive than negative sign. Otherwise, the relationship between Return on Sales (ROS) with industrial concentration shows more negative sign than positive sign.

Suggested Citation

  • Yulia Saftiana & Benadette Robiani & Syamsurijal A.K & Suhel, 2018. "Profitability, Advertising Intensity and Concentration Ratio in Indonesian Cigarette Industry (2000 -2013)," Romanian Journal of Economics, Institute of National Economy, vol. 47(2(56)), pages 34-48, December.
    • Handle: RePEc:ine:journl:v:47:y:2018:i:56:p:34-48
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    References listed on IDEAS

    as
    1. Ian Domowitz & R. Glenn Hubbard & Bruce C. Petersen, 1986. "Business Cycles and the Relationship Between Concentration and Price-Cost Margins," RAND Journal of Economics, The RAND Corporation, vol. 17(1), pages 1-17, Spring.
    2. Stephen Martin, 1979. "Advertising, Concentration, and Profitability: The Simultaneity Problem," Bell Journal of Economics, The RAND Corporation, vol. 10(2), pages 639-647, Autumn.
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    More about this item

    Keywords

    advertising intensity; concentration ratio; price cost margin and return on sales;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D57 - Microeconomics - - General Equilibrium and Disequilibrium - - - Input-Output Tables and Analysis
    • E64 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Incomes Policy; Price Policy

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