Advertising and R&D: Theory and evidence from France

Pre-print, Working paper: This paper exploits a unique panel of 59,000 French firms over 1990-2004 to investigate the interactions between R&D, advertising and the competitive environment.The empirical findings confirm the predictions of a dynamic model that complements results known in static frameworks. First, more competition pushes Neck and Neck firms to advertise more to attract a larger share of consumers on their products or services. Second, for a given competitive environment, quality leaders spend more in advertising in order to extract maximal rents; thus, lower costs of ads may favor R&D.

Author(s)

Philippe Askenazy, Thomas Breda, Delphine Irac

Date of publication
  • 2010
Keywords JEL
D12 D4 O31
Keywords
  • Advertising
  • Innovation
  • Competition
  • Lerner
Internal reference
  • PSE Working Papers n°2010-45
Version
  • 1