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Quantity versus quality effects of generic advertising: The case of Norwegian salmon

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  • Øystein Myrland

    (Department of Economics and Management, University of Troms�, Norway)

  • Diansheng Dong

    (Department of Applied Economics and Management, Cornell University, Ithaca, New York)

  • Harry M. Kaiser

    (Department of Applied Economics and Management, Cornell University, Ithaca, New York)

Abstract

In this article, a two-equation sample selection model is used to estimate a household demand function for salmon incorporating domestic generic advertising. The two-equation estimation procedure, based on purchase and unit value equations, allows us to handle heavily censored panel data for salmon purchases by Norwegian households and the quality effects simultaneously. Unit values of the aggregated salmon commodity calculated from the observed expenditures and quantities are hypothesized to represent the average quality of the purchased commodity. Advertising effects on both purchases and unit values are investigated. The model also allows us to separate the effects of conditional purchases and purchase probabilities. Results indicate that most (76%) of the advertising effect is through the change of nonpurchase occasions to purchase occasions, and that generic salmon advertising induces Norwegian households to spend more money on salmon. However, advertising causes households to select more expensive products rather than increasing their purchased quantities. [EconLit citations: D12, C24]. © 2007 Wiley Periodicals, Inc. Agribusiness 23: 85-100, 2007.

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File URL: http://hdl.handle.net/10.1002/agr.20108
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Bibliographic Info

Article provided by John Wiley & Sons, Ltd. in its journal Agribusiness.

Volume (Year): 23 (2007)
Issue (Month): 1 ()
Pages: 85-100

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Handle: RePEc:wly:agribz:v:23:y:2007:i:1:p:85-100

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Web page: http://onlinelibrary.wiley.com/journal/10.1002/(ISSN)1520-6297

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  1. L. Wade, 1988. "Review," Public Choice, Springer, Springer, vol. 58(1), pages 99-100, July.
  2. E.K. Berndt & B.H. Hall & R.E. Hall, 1974. "Estimation and Inference in Nonlinear Structural Models," NBER Chapters, National Bureau of Economic Research, Inc, in: Annals of Economic and Social Measurement, Volume 3, number 4, pages 103-116 National Bureau of Economic Research, Inc.
  3. Hurst, Susan J. & Forker, Olan D., 1991. "Annotated Bibliography of Generic Commodity Promotion Research (Revised)," Research Bulletins, Cornell University, Department of Applied Economics and Management 123107, Cornell University, Department of Applied Economics and Management.
  4. Ferrero, Jennifer L. & Boon, Leen & Kaiser, Harry M. & Forker, Olan D., 1996. "Annotated Bibliography of Generic Commodity Promotion Research," Research Bulletins, Cornell University, Department of Applied Economics and Management 122819, Cornell University, Department of Applied Economics and Management.
  5. Timothy J. Richards, 2000. "A discrete|continuous model of fruit promotion, advertising, and response segmentation," Agribusiness, John Wiley & Sons, Ltd., John Wiley & Sons, Ltd., vol. 16(2), pages 179-196.
  6. Ronald W. Ward, 1999. "Evaluating the beef promotion checkoff: The robustness of the conclusions," Agribusiness, John Wiley & Sons, Ltd., John Wiley & Sons, Ltd., vol. 15(4), pages 517-524.
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