Abstract

Advertising is prevalent in our lives, which is also one of the common ways for
firms to attract attention and promote sales. Its relationship with market concentration has long been a debate, where Lee (2002) did impressive analyses with Korean
manufacturing data. By regressing sector-level Canadian and US manufacturing data
in 2007 and 2009, this paper studies the relationship between advertising intensity and
market concentration. The regression results are consistent with Lee’s (2002) findings
on the pattern of the advertising-concentration relationship: an inverted U-shape in
the consumer goods industry and a lazy J-shape in the producer goods industry when
Herfindahl-Hirschman (HH) is used as Measure. To enrich the model, the effects of
the 2008 financial crisis are brought into the discussion.