An Empirical Investigation Of The Relationship Between Advertising Intensity And Market Structure

This thesis is mainly about the research on the relation between the advertisement of domestic consumer goods industries and market structure. It also discusses the applied range of recent popular theory according to the finds of empirical studies, and the reason why there is a large quantity of advertisement in domestic mobile communication industry.In the last 50 years, the research on the relation between advertisement and market structure among western economists becomes popular. They usually take the indexes of the advertising intensity (ad. / sales income), and the intensity of industry concentration as the research variances to educe a series of conclusion on their relations. Donald A. Hay and Derek J. Morris make a sum-up about the relation in their book named Industrial Economics and Organization. The analysis of the mainstream theory shows that, if taking the data of non utilities and consumer goods industry as samples, the relation between advertising intensity and the intensity of industry concentration will take on the shape of a inverted capital letter U. However, this relation doesn't fit for all industries, except those industries with large advertisement.This thesis also adopts advertising intensity and the intensity of industry concentration as research variances, choosing seven domestic consumer goods industries as subjects investigated. It makes regression analysis on sample data using simple equation and binary equation. The results testify the inverted U type relation. However,when adding the data of domestic mobile communication industry into the sample collection, and doing bivariate regression again, the assumption of the inverted U-type relation can not explain the relation of the two variances.Then the text starts to analyze the preferred samples subsequently, it finds that whatever industries selected as samples in the overseas research, or the seven industries chosen here, they have obvious differences from the mobile communication industry. The former belong to the traditional industry, while the mobile communication industry possesses the typical feature of new economy. It has special mode of pricing, conditioned by exterior factors. Therefore, the existence of inverted U-type relation between advertising intensity and the intensity of industry concentration depends on the following three hypotheses: in the non utilities, fitting for large advertisement, in the new economy, which is not limited by exterior factors in pricing and fitting for large advertisement, and in the consumer goods industry with large advertisement.At last, the thesis systematically analyses, with the Game Theory, the reason why there is a great deal of advertisement in domestic mobile communication industry.