Advertising, Concentration and Profitability in the Iranian Food Industries with Dynamic Panel Data

Due to complexity of modern societies, advertising is an inseparable part of the social and economic systems, both for consumers and firms. In addition, the advertising intensity is different among various types of market structure. In other words, concentration as an important indicator of market structure plays significant role in the firms’ decision about the amount of advertising expenditures. Using a panel of 22 four-digit Iranian food and beverage industries, this study analyses the relationship between advertising intensity and concentration over the period 2000 – 2012. The results show that an inverted U-shaped relationship exists between the advertising intensity and concentration. Also, the profitability has negative and export intensity has positive and significant effects on the advertising intensity.

Keywords:

Advertising Intensity , Concentration , Food and Beverage Industries , Dynamic Panel Data , Iran