Foreign entry and firm advertising intensity: evidence from China

Sun, Sizhong (2014) Foreign entry and firm advertising intensity: evidence from China. Review of Industrial Organization, 45. pp. 79-97.

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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.

Item ID: 34150
Item Type: Article (Research - C1)
ISSN: 1573-7160
Keywords: advertising intensity, foreign entry, FDI, China
Date Deposited: 18 Jul 2014 01:19
FoR Codes: 14 ECONOMICS > 1402 Applied Economics > 140209 Industry Economics and Industrial Organisation @ 100%
SEO Codes: 91 ECONOMIC FRAMEWORK > 9102 Microeconomics > 910203 Industrial Organisations @ 100%
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