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Price Competition, Non‐Price Competition and Market Structure: Theory and Evidence from the UK
Author(s) -
Symeonidis George
Publication year - 2000
Publication title -
economica
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.532
H-Index - 65
eISSN - 1468-0335
pISSN - 0013-0427
DOI - 10.1111/1468-0335.00217
Subject(s) - competition (biology) , economics , space (punctuation) , market structure , microeconomics , ecology , philosophy , linguistics , biology
This paper examines the impact of price competition on advertising/R&Dexpenditure and market structure. A general theoretical result is derived,which restricts the space of possible outcomes regarding the behaviour ofconcentration and advertising/R&D expenditure following anintensification of price competition. The theory is tested using UK data onthe evolution of competition, concentration and advertising over 1954&77. The econometric results suggest that the introduction of restrictive practiceslegislation in the UK caused a rise in concentration in previouslycartelized high‐advertising manufacturing industries and probably also afall in advertising intensity.