Foreign Entry and Firm Advertising Intensity: Evidence from China

Sizhong Sun

Review of Industrial Organization, 2014, vol. 45, issue 1, 79-97

Abstract: This paper investigates the determinants of advertising intensity at the firm level by focusing on the role of foreign entry. In a monopolistically competitive market with heterogeneous firms, we show that foreign entry affects the expected advertising intensity of domestic firms through its impact on the cost of resources, brand image, and productivity spillovers and its impact on firms’ exit behaviour. Then, using comprehensive firm-level data from China’s manufacturing sector between 2005 and 2007, we test this hypothesis and find that foreign entry significantly affects advertising intensity. Copyright Springer Science+Business Media New York 2014

Keywords: Advertising intensity; Foreign entry; FDI; China; D22; F23; L10; L60; M37 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (2)

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DOI: 10.1007/s11151-014-9426-z

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