Some recent literature on "vertical product differentiation" has d eveloped the idea that if the nature of technology and tastes in some industry take a certain form, then the industry must necessarily be "concentrated" and must remain so, no matter how large the economy becomes. The present paper develops this idea further and looks at so me of its implications. This approach offers a simple unified framewo rk within which to reexplore many issues that arise in considering th e relationship between advertising, R&D, and market structure. Copyright 1987 by Blackwell Publishing Ltd.
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