Optimal Generic Advertising under Bilateral Imperfect Competition between Processors and Retailers
AbstractThe purpose of this paper is to examine the impact of bilateral imperfect competition between processors and retailers and of import supply on optimal advertising intensity, advertising expenditures, and checkoff assessment rates. First, comparative static analyses were conducted on the newly developed optimal advertising intensity formula. Second, to consider the endogenous nature of optimal advertising, a linear market equilibrium model was developed and applied to the U.S. beef industry. Results showed that the full consideration of retailer-processor bilateral market power lowered the optimal values of assessment rates, advertising expenditures, and advertising intensity for the checkoff board while consideration of importers increases the optimal values. The results indicate that ignoring the import sector in optimal generic advertising modeling should underestimate these optimal values, while ignoring the bilateral market power between processors and retailers overestimates the values.
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Bibliographic InfoPaper provided by Agricultural and Applied Economics Association in its series 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. with number 149582.
Date of creation: 2013
Date of revision:
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bilateral market power; checkoff; import supply; oligopoly; oligopsony; optimal advertising; processor; retailer; Agribusiness; Agricultural and Food Policy; Consumer/Household Economics; Industrial Organization; Marketing; L13; L66; M37;
Find related papers by JEL classification:
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
- L66 - Industrial Organization - - Industry Studies: Manufacturing - - - Food; Beverages; Cosmetics; Tobacco
- M37 - Business Administration and Business Economics; Marketing; Accounting - - Marketing and Advertising - - - Advertising
This paper has been announced in the following NEP Reports:
- NEP-AGR-2013-06-04 (Agricultural Economics)
- NEP-ALL-2013-06-04 (All new papers)
- NEP-COM-2013-06-04 (Industrial Competition)
- NEP-MKT-2013-06-04 (Marketing)
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