Style over substance? Advertising, innovation, and endogenous market structure

• 成果类型: Article
• 署名作者: Cavenaile, Laurent; Celik, Murat Alp; Roldan-Blanco, Pau; Tian, Xu
• 署名单位: University of Toronto; University Toronto Scarborough; University of Toronto; Autonomous University of Barcelona; Barcelona School of Economics; University System of Georgia; University of Georgia
• 刊物名称: JOURNAL OF MONETARY ECONOMICS
• ISSN/ISSBN: 0304-3932
• DOI: 10.1016/j.jmoneco.2024.103683
• 发表日期: 2025
• 关键词: innovation; Advertising; markups; GROWTH; Industry dynamics; misallocation; Business dynamism

摘要

While firms use both innovation and advertising to boost profits, markups, and market shares, their broader social implications vary substantially. We study their interaction and analyze their implications for competition, industry dynamics, growth, and welfare. We develop an oligopolistic general-equilibrium growth model with firm heterogeneity. Market structure is endogenous, and firms' production, innovation, and advertising decisions interact strategically. We find advertising reduces static misallocation, but also depresses growth through a substitution effect with R&D. Although advertising is found to be socially useful, taxing it could simultaneously increase dynamic efficiency, contain excessive advertising spending, and raise revenue, while still reducing misallocation.