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Measuring the Effects of Generic Dairy Advertising in a Multi-Market Equilibrium

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  • Joseph V. Balagtas
  • Sounghun Kim

Abstract

We develop a multi-market equilibrium displacement model that allows demand linkages across downstream product markets, and supply linkages through the common use of a raw commodity as the key input. Applying the model to the dairy sector, we find that the effectiveness of producer-funded advertising depends on the demand relationships across dairy product markets (cross-price and cross-advertising elasticities) as well as the reallocation of milk toward the advertised market. We show that the previous literature, which ignores the horizontal linkages highlighted here, tends to overstate the effectiveness of generic commodity promotion for dairy, and thus results in too much advertising. Copyright 2007, Oxford University Press.

Suggested Citation

  • Joseph V. Balagtas & Sounghun Kim, 2007. "Measuring the Effects of Generic Dairy Advertising in a Multi-Market Equilibrium," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 89(4), pages 932-946.
    • Handle: RePEc:oup:ajagec:v:89:y:2007:i:4:p:932-946
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    File URL: http://hdl.handle.net/10.1111/j.1467-8276.2007.01037.x
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    Cited by:

    1. Glynn Tonsor & Ted Schroeder, 2015. "Market impacts of E. Coli vaccination in U.S. Feedlot cattle," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 3(1), pages 1-15, December.
    2. Fathi, Fatemeh & Bakhshoodeh, Mohammad, 2021. "Economic and environmental strategies against targeting energy subsidy in Iranian meat market: A game theory approach," Energy Policy, Elsevier, vol. 150(C).
    3. McKendree, Melissa G.S. & Tonsor, Glynn T. & Schroder, Ted C. & Hendricks, Nathan P., 2017. "Changing Impacts of Beef Demand on Cattle Producers," 2017 Annual Meeting, February 4-7, 2017, Mobile, Alabama 252730, Southern Agricultural Economics Association.
    4. Tozooneyi, Takesure & Pendell, Dustin L. & Rushton, Jonathan, 2023. "Potential economic welfare impacts of the African Swine Fever virus on the U.S. pork supply chain," 2023 Annual Meeting, July 23-25, Washington D.C. 335872, Agricultural and Applied Economics Association.
    5. Metin Cakir & Joseph V. Balagtas, 2010. "Econometric evidence of cross-market effects of generic dairy advertising," Agribusiness, John Wiley & Sons, Ltd., vol. 26(1), pages 83-99.
    6. Sounghun Kim & Donghwan An & Kwansoo Kim, 2010. "Measuring The Impacts Of Trade Liberalization Focusing On The Effects Of Processed Goods On Raw Material Markets: An Application To The Dairy Sector In Korea," Korean Economic Review, Korean Economic Association, vol. 26, pages 341-360.
    7. Melissa G. S. McKendree & Glynn T. Tonsor & Ted C. Schroeder & Nathan P. Hendricks, 2020. "Impacts of Retail and Export Demand on United States Cattle Producers," American Journal of Agricultural Economics, John Wiley & Sons, vol. 102(3), pages 866-883, May.
    8. Zhang, Wei, 2021. "California's Climate Policy and the Dairy Manufacturing Industry: How Does a Federal Milk Marketing Order Matter?," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 46(3), September.
    9. Schroeder, Ted C. & Tonsor, Glynn T., 2011. "Economic Impacts of Zilmax(R) Adoption in Cattle Feeding," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 36(3), pages 1-15.

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