How Does Advertising Depend on Competition? Evidence from U.S. Brewing

Ambarish Chandra and Matthew Weinberg ()
Additional contact information
Matthew Weinberg: Drexel University, Philadelphia, Pennsylvania 19104

Management Science, 2018, vol. 64, issue 11, 5132-5148

Abstract: The relationship between market structure and advertising has been extensively studied, but has generated sharply opposing theoretical predictions, as well as inconclusive empirical findings, likely because of severe endogeneity concerns. We exploit the 2008 merger of Miller and Coors in the U.S. brewing industry to examine how changes in local concentration affect firms’ advertising behavior. Well-established regional preferences over beer brands, and the sharp increase in concentration from the merger, make this an excellent setting to analyze this question. We find a significant positive effect of local market concentration on advertising expenditures: a 100-point increase in the Herfindahl–Hirschmann Index measure of concentration increases advertising per capita by about 5%. Our findings shed light on how and when firms choose to deploy advertising.

Keywords: advertising; competition; market structure; mergers (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

Downloads: (external link)
https://doi.org/10.1287/mnsc.2017.2889 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:64:y:2018:i:11:p:5132-5148

Access Statistics for this article

More articles in Management Science from INFORMS Contact information at EDIRC.
Bibliographic data for series maintained by Chris Asher ().