Question:
How does the market structure affect the level of advertise?
Author: Hjalmer PedersenAnswer:
If perfect competition advertising no effect, given perfect competition assumptions. With Oligopoly (large companies are competing against each other) so that monopolistic competition can be strong incentives to advertise If the market is monopolistic or characterized by strong barriers to entry is the incentive for advertising usually not as large as the oligopoly Monopolist may (periodically) use advertising as a tool to keep potential entrants out of the market. Finally, the answers may contain a reference to / use of Dorfmann Steiner conditions (more below)
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