Concentration and its Effect on Advertising: Case Study: Iranian Food and Beverage Industries

Purpose: Todays, 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. This study aims at analyzing the relationship between competition index (concentration) and advertising in the Iranian food and beverage industries. Methodology: 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 2007– 2019. Findings: 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. Originality/Value: The structure-conduct-performance (SCP) paradigm suggests that performance of the industry is affected by the conduct of the participants in the market, which is influenced by the companies’ market structure.