The Review of Economics and Statistics Vol. 60 No. 3 1978
Estimating Advantages to Large-Scale Advertising
Abstract
1. Absolute Cost Advantage: High levels of advertising may create costs for potential entrants greater than those faced by existing firms when they entered. 2. Scale Economies: If there exist scale economies in advertising, defined as a greater than proportional increase in quantity sold per given increase in units of advertising,' potential entrants must either incur higher advertising costs per unit of output than existing firms or increase output. But increasing output increases industry supply, thus lowering prices, increasing advertising competition from established firms, or both, depending upon the structure of the particular industry. 3. Pecuniary Economies of Scale: Lower prices per ad for large advertisers via quantity discounts, etc., may prevail.
- DOI
- 10.2307/1924168
- Volume
- 60
- Issue
- 3
- Pages
- 428
- Sources
- openalex crossref