IDEAS home Printed from https://ideas.repec.org/a/sae/toueco/v23y2017i1p214-222.html
   My bibliography  Save this article

The effect of advertising on market share instability in the hotel industry

Author

Listed:
  • Chiang-Ming Chen

    (National Chi Nan University, Taiwan)

  • Yu-Chen Lin

    (Soochow University, Taiwan)

  • Ho-Wen Yang

    (Feng Chia University, Taiwan)

Abstract

Although the theoretical literature on the effect of advertising is well developed, few empirical studies quantify the importance of advertising on the market share instability of hotels. This article investigates the influence of advertising on market share instability using Taiwanese international tourist hotel operation data. Telser argues that advertising reduces a leading firm’s market share instability by creating market power and entry barriers. This study provides empirical evidence for the theoretical inverse relationship between advertising intensity and market share instability among leading firms in the hotel industry. It identifies advertising as an important factor influencing the market share instability of hotels. Moreover, advertising tends to increase the market share instability of leading firms for different quantiles of the market share instability. The results lend moderate support to the validity of the hypothesis in the Telser model.

Suggested Citation

  • Chiang-Ming Chen & Yu-Chen Lin & Ho-Wen Yang, 2017. "The effect of advertising on market share instability in the hotel industry," Tourism Economics, , vol. 23(1), pages 214-222, February.
    • Handle: RePEc:sae:toueco:v:23:y:2017:i:1:p:214-222
    DOI: 10.5367/te.2015.0502
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.5367/te.2015.0502
    Download Restriction: no
    File URL: https://libkey.io/10.5367/te.2015.0502?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Eckard, E Woodrow, Jr, 1991. "Competition and the Cigarette TV Advertising Ban," Economic Inquiry, Western Economic Association International, vol. 29(1), pages 119-133, January.
    2. Hirschey, Mark, 1981. "The Effect of Advertising on Industrial Mobility, 1947-72," The Journal of Business, University of Chicago Press, vol. 54(2), pages 329-339, April.
    3. Caves, Richard E & Porter, Michael E, 1978. "Market Structure, Oligopoly, and Stability of Market Shares," Journal of Industrial Economics, Wiley Blackwell, vol. 26(4), pages 289-313, June.
    4. Mariana Mazzucato & Willi Semmler, 1999. "Market share instability and stock price volatility during the industry life-cycle: the US automobile industry," Journal of Evolutionary Economics, Springer, vol. 9(1), pages 67-96.
    5. Sandler, Ralph D, 1988. "Market Share Instability in Commercial Airline Markets and the Impact of Deregulation," Journal of Industrial Economics, Wiley Blackwell, vol. 36(3), pages 327-335, March.
    6. Reekie, W Duncan, 1974. "Advertising and Market Share Mobility," Scottish Journal of Political Economy, Scottish Economic Society, vol. 21(2), pages 143-158, June.
    7. Lester G. Telser, 1964. "Advertising and Competition," Journal of Political Economy, University of Chicago Press, vol. 72(6), pages 537-537.
    8. Alemson, M A, 1970. "Advertising and the Nature of Competition in Oligopoly Over Time: A Case Study," Economic Journal, Royal Economic Society, vol. 80(318), pages 282-306, June.
    9. Chiang-Ming Chen & Chen-Kang Chang & Chia-Yu Yeh, 2012. "A quantile regression approach to re-investigate the relationship between sleep duration and body mass index in Taiwan," International Journal of Public Health, Springer;Swiss School of Public Health (SSPH+), vol. 57(3), pages 485-493, June.
    10. Eckard, E Woodrow, Jr, 1987. "Advertising, Competition, and Market Share Instability," The Journal of Business, University of Chicago Press, vol. 60(4), pages 539-552, October.
    11. James M. Ferguson, 1967. "Advertising and Liquor," The Journal of Business, University of Chicago Press, vol. 40, pages 414-414.
    12. Lynk, William J, 1981. "Information, Advertising, and the Structure of the Market," The Journal of Business, University of Chicago Press, vol. 54(2), pages 271-303, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Xue Sun & Yuhao Li & Bo Guo & Li Gao, 2023. "Marketing Automation: How to Effectively Lead the Advertising Promotion for Social Reconstruction in Hotels," Sustainability, MDPI, vol. 15(5), pages 1-20, March.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Chu, Hsiao-Ping & Yeh, Ming-Liang & Sher, Peter J. & Chiu, Yi-Chia, 2007. "Will the leading firm continue to dominate the market in the Taiwan notebook industry?," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 383(2), pages 473-479.
    2. Gallet, Craig A. & List, John A., 2001. "Market share instability: an application of unit root tests to the cigarette industry," Journal of Economics and Business, Elsevier, vol. 53(5), pages 473-480.
    3. Willem F. J. Buijink & Steven J. Maijoor & Roger H. G. Meuwissen, 1998. "Competition in Auditing: Evidence from Entry, Exit, and Market Share Mobility in Germany versus The Netherlands," Contemporary Accounting Research, John Wiley & Sons, vol. 15(3), pages 385-404, September.
    4. Ulrich Doraszelski & Sarit Markovich, 2007. "Advertising dynamics and competitive advantage," RAND Journal of Economics, RAND Corporation, vol. 38(3), pages 557-592, September.
    5. Mike Fusillo, 2013. "The Stability of Market Shares in Liner Shipping," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 42(1), pages 85-106, February.
    6. Yuji Honjo & Noriyuki Doi & Yasushi Kudo, 2018. "The Turnover of Market Leaders in Growing and Declining Industries: Evidence from Japan," Journal of Industry, Competition and Trade, Springer, vol. 18(2), pages 121-138, June.
    7. Nelson Sá, 2015. "Market concentration and persuasive advertising: a theoretical approach," Journal of Economics, Springer, vol. 114(2), pages 127-151, March.
    8. Jacques Fontanel, 1979. "L'analyse microéconomique des dépenses publicitaires," Post-Print hal-03156532, HAL.
    9. T. Parker Ballinger & Bradley T. Ewing & Mark A. Thompson, 2013. "Rivalry and the dynamic instability of venture capital investment shares," Applied Economics Letters, Taylor & Francis Journals, vol. 20(12), pages 1150-1154, August.
    10. Jacques Fontanel, 1979. "Introduction à l'analyse économique de la publicité," Post-Print hal-03156506, HAL.
    11. Weinem, Michael & Heil, Oliver, 2010. "Pre-entry advertising, entry deterrence and multi-informational signaling," MPRA Paper 35001, University Library of Munich, Germany.
    12. Kv, Bhanu Murthy & Deb, Ashis Taru, 2008. "Theoretical Framework Of Competition As Applied To Banking Industry," MPRA Paper 7465, University Library of Munich, Germany.
    13. Rebecca Cleary & Rigoberto Lopez, 2014. "Supermarket responses to Wal-Mart Supercenter expansion: a structural approach," Empirical Economics, Springer, vol. 47(3), pages 905-925, November.
    14. Yajie Chen & Qinlin Zhong & Fuxiu Jiang, 2020. "The capital market spillover effect of product market advertising: Evidence from stock price synchronicity," Frontiers of Business Research in China, Springer, vol. 14(1), pages 1-21, December.
    15. Barla, Philippe, 1996. "Rivalry in the U.S. Airline Industry," Cahiers de recherche 9603, Université Laval - Département d'économique.
    16. Faouzi Bensebaa, 2003. "La dynamique concurrentielle:défis analytiques et méthodologiques," Revue Finance Contrôle Stratégie, revues.org, vol. 6(1), pages 5-37, March.
    17. Hałaj, Grzegorz & Żochowski, Dawid, 2006. "Strategic groups in Polish banking sector and financial stability," MPRA Paper 326, University Library of Munich, Germany.
    18. Elango, B. & Pattnaik, Chinmay, 2013. "Response strategies of local firms to import competition in emerging markets," Journal of Business Research, Elsevier, vol. 66(12), pages 2460-2465.
    19. Faramarzi, Ashkan & Bhattacharya, Abhi, 2021. "The economic worth of loyalty programs: An event study analysis," Journal of Business Research, Elsevier, vol. 123(C), pages 313-323.
    20. Martin Gaechter & Peter Schwazer & Engelbert Theurl, 2013. "Entry into the Physicians’ Market: Empirical Evidence from the Outpatient Sector in Austria," DANUBE: Law and Economics Review, European Association Comenius - EACO, issue 4, pages 245-260, December.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:toueco:v:23:y:2017:i:1:p:214-222. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.