Advertising Traded Goods
AbstractNerlove and WaughÂ’'s theory of cooperative (generic) advertising is extended to the case of traded goods. Results suggest that trade reduces the incentive to promote by enlarging the effective supply or demand elasticity facing the industry. This is especially true in the net exporter situation where the enlarged demand elasticity (relative to the autarky case) limits the ability to shift advertising costs onto consumers. Simulations of the model using data and parameter values for the California egg industry suggest that ignoring trade prejudices benefit-cost ratios in favor of the promotion program. The upward bias, moreover, is significant even when the trade share is modest.
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Bibliographic InfoArticle provided by Western Agricultural Economics Association in its journal Journal of Agricultural and Resource Economics.
Volume (Year): 24 (1999)
Issue (Month): 01 (July)
Other versions of this item:
- Kinnucan, Henry W., 1998. "Advertising Traded Goods," 1998 Annual meeting, August 2-5, Salt Lake City, UT 20965, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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- Freebairn, John W. & Alston, Julian M., 2001. "Generic advertising without supply control: implications of funding mechanisms for advertising intensities in competitive industries," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 45(1), March.
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