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Agricultural Market Structure, Generic Advertising, and Welfare

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  • Cardon, James H.
  • Pope, Rulon D.

Abstract

This analysis begins with a definition and discussion of productive advertising. Then, following Dixit and Norman, persuasive advertising is used to study the welfare effects of generic advertising by marketing orders. The study first examines horizontal competition when the competing advertiser is a monopoly, and results show that the socially optimal level of advertising for a competitive marketing order is positive only if advertising raises monopoly output. Next, advertising choices of a marketing order which sells its output to a monopolistic distributor are considered. If the distributor is a monopolist, then marketing order advertising raises welfare. This finding is in marked contrast to the results for the horizontal case studied by Dixit and Norman.

Suggested Citation

  • Cardon, James H. & Pope, Rulon D., 2003. "Agricultural Market Structure, Generic Advertising, and Welfare," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 28(2), pages 1-16, August.
    • Handle: RePEc:ags:jlaare:31098
    DOI: 10.22004/ag.econ.31098
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    References listed on IDEAS

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    Cited by:

    1. Carlos E. Carpio & Olga Isengildina-Massa, 2016. "Does Government-sponsored Advertising Increase Social Welfare? A Theoretical and Empirical Investigation," Applied Economic Perspectives and Policy, Agricultural and Applied Economics Association, vol. 38(2), pages 239-259.
    2. Goddard, Ellen W. & Shank, Benjamin & Panter, Chris & Nilsson, Tomas K.H. & Cash, Sean B., 2007. "Canadian Chicken Industry: Consumer Preferences, Industry Structure and Producer Benefits from Investment in Research and Advertising," Project Report Series 52088, University of Alberta, Department of Resource Economics and Environmental Sociology.
    3. Tribl, Christoph & Salhofer, Klaus, 2004. "Promoting Organic Food: Information Policy Versus Production Subsidy," 2004 Annual meeting, August 1-4, Denver, CO 20003, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).

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