 Advertising and R&D: theory and evidence from FrancePhilippe Askenazy,
Thomas Breda () and
Delphine Irac
Post-Print from HAL Abstract: Advertising and innovation are two engines for firms to escape competition and improve profits. We propose a model that encompasses both the static and dynamic interactions between R&D, advertising and competitive environment. It provides three main predictions. First, for a given competitive environment, quality leaders spend more in advertising in order to extract maximal rents; thus, lower costs of ads may favor R&D. Second, the inverted-U relation between competition and R&D still holds with the introduction of advertising. Third, more competition is associated with on average more advertising expenditures. Empirical evidence from a large panel of 59,000 French firms over 1990–2004 supports these three properties. Keywords: advertising; R&D; innovation; competition; Lerner (search for similar items in EconPapers) Published in Economics of Innovation and New Technology, 2016, 25 (1), pp.33-56. ⟨10.1080/10438599.2015.1046670⟩ There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it. Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-01307705 DOI: 10.1080/10438599.2015.1046670 Access Statistics for this paper More papers in Post-Print from HAL |
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