This interference did not exist for incumbent prior to new firms' entry. Entrant's MES will be lower than incumbent's. This sets up a limit price differential between the incumbent and entrant. If so, this base amount must be spent regardless of output level. Threshold Effect occurs because size of audience to be reached determines advertising expenditures, not the expected level of firm sales.
Repetition makes advertising more effective.
True particularly for experience goods, which must be bought and used to fully observe the product's qualities. There are rate structures in advertising offering lower unit rates for larger volumes of ad messages. For example, there is some evidence that economies exist for national vs. regional media. If economies of scale in advertising exist, the MES is increased, setting up the potential for a limit price differential between incumbents and entrants, independent of the impact of AMPC . Empirical work suggests the effect does not always hold.