Advertising and Market Structure in the US Mutual Fund Industry

Research output: Contribution to journalArticlepeer-review


This paper empirically investigates the role played by advertising in determining market structures in various segments of the US mutual fund industry. Segments with intermediaries or sophisticated customers exhibit low advertising elasticity of demand, low advertising expenditures, and low market concentration. They also experience further market fragmentation over time. On the contrary, segments which cater to less sophisticated customers without intermediaries exhibit advertising-sensitive demand as well as high advertising expenditures. Those segments exhibit high market concentration and their market structure becomes further concentrated over time. These findings shed light on the impact of consumer characteristics on firms' optimal advertising and resultant market structure.

Original languageEnglish
Pages (from-to)238-257
Number of pages20
JournalInternational Economic Journal
Issue number2
StatePublished - 2 Apr 2020

Bibliographical note

Funding Information:
This work was supported by the Ewha Womans University Research Grant of 2017. I greatly thank the editor and two anonymous reviewers for their insightful comments. The work was partly conducted when the author was an assistant professor at the Haas School of Business, University of California, Berkeley. The usual disclaimer applies.

Publisher Copyright:
© 2019, © 2019 Korea International Economic Association.


  • Advertising
  • distribution channel
  • market concentration
  • mutual funds


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