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Advertising and the Dynamics of Market Structure: The UK Car Industry, 1958–1983 *
Author(s) -
Geroski P. A.,
Murfin A.
Publication year - 1990
Publication title -
british journal of management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.407
H-Index - 108
eISSN - 1467-8551
pISSN - 1045-3172
DOI - 10.1111/j.1467-8551.1990.tb00164.x
Subject(s) - advertising , market share , business , market share analysis , comparative advertising , market structure , marketing , industrial organization , market microstructure , order (exchange) , finance
SUMMARY This paper looks at the effect of advertising on market share dynamics, developing a model that describes the mechanism by which advertising affects consumer choice and illustrating it with reference to the UK car market. Advertising shares are observed to be highly positively correlated with market shares, suggesting that advertising has both pro‐ and anti‐competitive effects. Advertising facilitates entry in as far as entrants can acquire market share through advertising, but it inhibits entry when an escalation in total industry advertising makes this acquisition prohibitively costly.