THE role of advertising as a competitive weapon within consumer goods industries has received considerable attention from empirical researchers in recent years. Studies have found generally that a firm's market share is related positively to its share of the industry's advertising.1 There is also some evidence of a ratchet effect at work in competitive advertising situations which causes an upward trend in advertising intensity over time in some industries.2 In The New Industrial State, Professor Galbraith has postulated that advertising is effective not only within a given industry, but is also effective in shifting customers between industries: 'If advertising affects the distribution of demand between sellers of a particular product, it must also be supposed that it affects distribution as between products.'3 The purpose of this paper is to examine the pattern of advertising expenditures in the U.S. consumer goods sector during the period 1948-67 and to perform an empirical test of Professor Galbraith's hypothesis.
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Ronald P. Wilder (1974) studied this question.