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Advertising, Competition, and Market Share Instability

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  • Eckard, E Woodrow, Jr

Abstract

This paper tests the hypothesis that advertising reduces leading-firm market-share instability (a proxy for interfirm rivalry) by creating market power. If advertising increases product differentiation and brand loyalty, then it also reduces demand cross elasticities and stabilizes shares. Changes over time in the combined market shares of the top four firms are examined for a large sample of four-digit Standard Industrial Classification manufacturing indust ries for 1963-82. Multiple regression equations are used to explain s hare instability, measured as deviations both about the simple mean a nd about a linear time trend. The results indicate that advertising d oes not reduce market share instability. Copyright 1987 by the University of Chicago.

Suggested Citation

  • 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.
  • Handle: RePEc:ucp:jnlbus:v:60:y:1987:i:4:p:539-52
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    References listed on IDEAS

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    1. Barro, Robert J & Sahasakul, Chaipat, 1983. "Measuring the Average Marginal Tax Rate from the Individual Income Tax," The Journal of Business, University of Chicago Press, vol. 56(4), pages 419-452, October.
    2. Roger H. Gordon, 1983. "Social Security And Labor Supply Incentives," Contemporary Economic Policy, Western Economic Association International, vol. 1(3), pages 16-22, April.
    3. Robert J. Barro & Chaipat Sahasakul, 1983. "Measuring the Average Marginal Tax Rates from Social Security and the Individual Income Tax," University of Chicago - George G. Stigler Center for Study of Economy and State 29, Chicago - Center for Study of Economy and State.
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    Cited by:

    1. Chung, Kee H. & Kim, Youngsoo, 2005. "The dynamics of dealer markets and trading costs," Journal of Banking & Finance, Elsevier, vol. 29(12), pages 3041-3059, December.

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