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

Purpose: Todays, advertising intensity is different among various types ofmarket structure. In other words, concentration as an important indicator ofmarket structure plays significant role in the firms’ decision about the amountof advertising expenditures. This study aims at analyzing the relationshipbetween competition index (concentration) and advertising in the Iranian foodand beverage industries.Methodology: Using a panel of ۲۲ four-digit Iranian food and beverageindustries, this study analyses the relationship between advertising intensityand concentration over the period ۲۰۰۷– ۲۰۱۹.Findings: The results show that an inverted U-shaped relationship existsbetween the advertising intensity and concentration. Also, the profitability hasnegative and export intensity has positive and significant effects on theadvertising intensity.Originality/Value: The structure-conduct-performance (SCP) paradigmsuggests that performance of the industry is affected by the conduct of theparticipants in the market, which is influenced by the companies’ marketstructure.