Enterprise Non-price Competitive Behavior Choice: R & D Or Advertising? Th

Competitive behavior of enterprises can be divided into price competition and non-price competition. With the rising of the buyer’s market, non-price competition gains more and more attention, especially in recent years, more and more company become top bidder of prime advertising resource bidding, yet the innovation consciousness of enterprises gradually awaken, all of which indicate that non-price competitive strategy began to change. Advertising and R&D are two common non-price competition strategies; although there is difference in form, but the mechanism is essentially the same, both advertising and R&D aim to increase the market demand, thus improve the competitive position.This thesis portray the advertising intensity using Dorfman-Steiner conditions, at the same time, we use the similar analysis mechanism and the basic theory of industrial organization analysis of SCP paradigm to discuss the R&D behavior. Based on the2004-2007Chinese industrial statistics database, we use the Tobit model to analyze the relationship between market structure and advertising intensity, also the relationship between market structure and R&D intensity. In this empirical analysis, after controlling the output value of new products, regional variables, industry variables, we found that there exists an inverted "U"-shaped relationship between market concentration and advertising intensity or R&D intensity, as well as the relationship between firm size and advertising intensity or R&D intensity. Besides, the higher market penetration as well as profit margin, the higher incentive of R&D and advertising investment. At the same time, taking into account the special structure of Chinese enterprise property rights, we found state-owned enterprises is lack of incentive of R&D and advertising. We also found a positive relationship between profit margin of last period and advertising intensity as well as R&D intensity. Besides, different area has different affluence on R&D and advertising. In a word, coastal areas or port nearby area are mostly export-oriented economy, R&D intensity is naturally higher, while inland areas are inward-looking economy, there will be higher advertising intensity. In addition, advertising or R&D intensity of different industries also exist difference.Both R&D and advertising belong to non-price competition category; also belong to behavioral decision of the same time. In order to analyze the choice of different types of enterprises, we first combine the non-price competitive behavior using0-1variables, in my model, there are four strategies, i.e. strategy1(non-advertising, non-R&D), strategy2(advertising, non-R&D) strategy3(non-advertising, R&D) and strategy4(advertising, R&D), then we use mlogit model to verify the choice of different types of enterprises, and we found that the increase of firm size, market concentration or market share can significantly stimulate enterprises to advertise or do R&D, but the incentive effects to four strategies are different, for example, the incentive effect to strategy4is the greatest among the four strategies due to the increase of market concentration or market share, at the same time, the incentive effect to strategy3is greater than strategy2. In addition, property characteristics and location will also affect the composition of the behavior, but the effect is mixed.