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Advertising and the profitability of leading and following firms
Author(s) -
Hirschey Mark
Publication year - 1982
Publication title -
managerial and decision economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.288
H-Index - 51
eISSN - 1099-1468
pISSN - 0143-6570
DOI - 10.1002/mde.4090030205
Subject(s) - profitability index , profit (economics) , competition (biology) , advertising , business , barriers to entry , economics , monetary economics , industrial organization , marketing , microeconomics , market structure , finance , ecology , biology
This study finds a significant positive effect of advertising on profit rates for both leading, large following and small following firms in US industry. This finding is consistent with an intangible capital view of advertising, but is clearly inconsistent with the “competing” barrier to entry or barrier to mobility hypothesis. Thus, further support is gained for the view that few, if any, harmful consequences for competition arise due to high advertising intensity in industry.