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Advertising, Concentration and Profitability in Manufacturing

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  • Gisser, Micha

Abstract

This paper predicts an inverted-U relationship between concentration and advertising only for oligopolistic industries facing relatively less elastic demand curves. It rejects the inverted-U theory based on the hypothesis that the large firms collude and lends empirical support to the idea that causation runs from concentration to advertising intensity. By confirming that the effect of advertising on profitability is significant and greater for industries producing homogeneous goods than for those producing heterogeneous goods, this study fails to support the barriers-to-entry hypothesis. Copyright 1991 by Oxford University Press.

Suggested Citation

  • Gisser, Micha, 1991. "Advertising, Concentration and Profitability in Manufacturing," Economic Inquiry, Western Economic Association International, vol. 29(1), pages 148-165, January.
    • Handle: RePEc:oup:ecinqu:v:29:y:1991:i:1:p:148-65
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    Cited by:

    1. A. Vlachvei & K. Oustapassidis, 1998. "Advertising, concentration and profitability in Greek food manufacturing industries," Agricultural Economics, International Association of Agricultural Economists, vol. 18(2), pages 191-198, March.
    2. Nelson Sá, 2015. "Market concentration and persuasive advertising: a theoretical approach," Journal of Economics, Springer, vol. 114(2), pages 127-151, March.
    3. Micha Gisser & Raymond Sauer, 2000. "The Aggregate Relation between Profits and Concentration is Consistent with Cournot Behavior," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 16(3), pages 229-246, May.
    4. Georgiadis, Andreas & Pitelis, Christos N., 2010. "The interrelationship between HR, strategy and profitability in service SMEs: empirical evidence from the UK tourism hospitality and leisure sector," LSE Research Online Documents on Economics 28722, London School of Economics and Political Science, LSE Library.

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